Crypto roundup: market still down, but Bitcoin fighting hard for crucial support level
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The crypto market remains down today, but not out, with Bitcoin in a fight to reclaim and hold the 200-day moving average support level.
That support level, according to technical analysts, is around US$46,000. For several hours, Bitcoin (BTC) has been hovering either just above it, or just below it.
At the time of writing, Bitcoin is slowly lifting itself off the canvas and has moved to US$46,353. It apparently needs to reclaim $46.5K, and show further strength there, in order to give analysts enough reason to believe it can get back on a clear upwards trajectory again in the short term.
The entire market is down 8.94% since yesterday with a total market cap value of US$2.133 trillion. And needless to say, the overall situation is a precarious one right now.
The #BTC retrace continues a bit deeper into the major demand area (orange)
That said, $BTC is at Weekly support right now (blue)
— Rekt Capital (@rektcapital) September 8, 2021
Many market participants believe the reason Bitcoin crashed by US$9,000 in a matter of a few hours yesterday was due to mass unravelling of over-leveraged traders and borrowers.
There is speculation floating around, too, that many of these liquidated traders were anticipating a strong Bitcoin move on the back of the first day of BTC legal tender in El Salvador – perhaps disregarding or oblivious to the old “buy the rumour, sell the news” risk that so commonly plays out in crypto.
There’s also the fact that, at the time of the crash yesterday, the US dollar index (DXY) was showing strength and spiking upwards. Bitcoin and crypto have a history of correlating moves against the movement of the US dollar, as does gold – the more traditional hedging asset against falling economies. Gold, too, tumbled yesterday, although nowhere near as sharply as Bitcoin.
Adding to all this and muddying the waters further, the SEC’s warning to Coinbase regarding its Lend service is also providing some market FUD (fear, uncertainty and doubt) today.
There’s been some interesting data presented today by on-chain analyst Willy Woo, which might give some cause for hope of market-strength revival, or at least provide some clarity. It pertains to who’s been selling, who’s been getting liquidated, and who hasn’t.
“Leverage markets sold off, but investor buying just got stronger,” said the Hong Kong-based Kiwi within a series of tweets today.
He also compared the market tanking yesterday to the March 2020 COVID-related crash, pointing out that on this occasion, the dip hasn’t been supported by long-term investors.
Leverage markets sold off but investor buying just got stronger.
BTC flash crashes are caused by deleveraging, the COVID crash was similar in that derivatives overreacted, but back then it was supported by investors. This one was completely divergent and a mystery.
Cheap coins pic.twitter.com/Q1nIQ3T56R
— Willy Woo (@woonomic) September 8, 2021
If that seems like immediately impenetrable analysis, the upshot is that crypto HODLers were not responsible for yesterday’s dip. According to Woo’s analysis, new entrants, recent whales, provided the majority of sell pressure and liquidating action.
I think I may have found the culprit. Even though Open Interest was crazy high, spot margin borrowing was also peaking leading up to the crash.
Both markets combined created enough deleveraging power to flush price.
(Margin longs on spot markets unwound as much as derivatives.) https://t.co/rOWIE4aX85
— Willy Woo (@woonomic) September 8, 2021
And another on-chain data analysis resource, Whalemap, has been presenting a similar thesis to Woo’s today, too…
So yesterday we had a sell off. The move was quite violent and large volumes of #Bitcoin were being sold off on spot markets. But who was selling? Not HODLers. Mostly whales and in fact the ones that bought their btc only quite recently pic.twitter.com/cO9LkYuCYl
— whalemap (@whale_map) September 8, 2021
• British banking giant Standard Chartered has released an investor report with an extremely bullish price valuation for Ethereum – US$35K.
• The report suggests that Ethereum could reach that level if Bitcoin first reaches the top of the bank’s valuation range, which is US$175K.
• While speaking at the Hodl 2021 virtual conference, a former deputy governor of the Reserve Bank of India has pushed for India to embrace crypto and digital assets.
• A Hong Kong securities official, meanwhile, has proposed far stricter measures on crypto trading in the city-state, citing crypto fraud as a major problem.
• The hackers behind a recent Cream Finance exploit have today returned US$17.6 million to the DeFi protocol, which represents most of the stolen funds.
• Ethereum transaction protocol Eden Network has raised US$17.4 million in seed funding from some of crypto’s biggest VCs, including Multicoin Capital and Alameda Research.
• El Salvador has reportedly fixed its Chivo Bitcoin wallet issue, which struggled to roll out yesterday, having been taken down for several hours for maintenance.
• NBA star Steph Curry has joined NFL legend Tom Brady as another high-profile sportsperson working with crypto exchange FTX in an ambassadorial role.
Just getting started in the crypto game…y'all got any advice??
— Stephen Curry (@StephenCurry30) September 7, 2021