Is The Bitcoin Sell-Off Not Over? Traders Looking for Another Nuke to $45k
Bitcoin is currently trading around $56,500, after getting a boost from Venmo announcing crypto support; working on changing the red market into the green.
While the leading digital asset had nearly a 23% pullback, a crash that came in line with the hash rate collapse due to an accident in Northwest China which, as reported, has already started to make a recovery, not everyone is confident that we have bottomed out.
Several market participants are calling for a deeper pullback still with trader Josh Rager pointing out that Bitcoin is breaking below structure and below the 50D EMA with the price to hit $45k area in the next few weeks though it won’t be without volatility, so bounces are expected along the way.
Two things that have me thinking this is a bigger $BTC correction than we've seen so far:
1) We've lost the 50d SMA for the first time since $11k
2) We've spent the most time above the 20w SMA since just about ever
— Jonny Moe (@JonnyMoeTrades) April 19, 2021
While the bull market is not expected to be over, given that BTC continues to move out of exchanges — 118,000 BTC over the past five days — in anticipation of higher prices, another trader, Smart Contractor, says either we sweep the flash crash lows again and bounce, or we continue to 45k before the bounce.
“Short-term bearish. Long-term bullish. I'll keep my bearish bias until the estimated leverage ratio, and Korea premium cools down,” comes from Ki Young Ju, CEO of data provider CryptoQuant.
Despite the more than 20% sell-off in price and over 1 million traders liquidated for $10.1 billion that sent the funding rates negative for the first time in 2021, it didn’t take much time for them to start gaining strength again; they may need to be obliterated again before we continue higher.
— skew (@skewdotcom) April 20, 2021
Charles Edwards of Capriole Investments, while noting the prime entry opportunities from the fallout of the flash crash in terms of overleveraged traders having been cleansed, pointed out that futures open interest is now also down -22% to $21 billion.
TraderSZ is expecting one more nuke to take BTC in the $43k-$46k range and $1,750 for ETH. ETH -5.79% Ethereum / USD ETHUSD $ 3,903.59
-$226.02-5.79% Volume 43.29 b Change -$226.02 Open $3,903.59 Circulating 115.88 m Market Cap 452.37 b 42 min Ether Will “Keep Gaining Market Share Relative to Bitcoin,” Says Pantera Capital 21 h Diginex's Crypto Custodial Arm Digivault Bags Approval From UK FCA 21 h Square CFO: “No Plans” to Buy More Bitcoin At This Time After Losing $20M Due to Price Drop
Bitcoin’s dip came at a time when the S&P 500 has printed fresh new all-time highs this week, which given that BTC continues to hold its correlation with is positive for the crypto asset.
“Systematic risk, and opportunity, remains tied to the traditional markets in the short-term,” wrote Edwards, who advises to “keep an eye out for any major changes to macro-economic policy or other major risk/volatility factors in the stock market.”
Edwards also expects any substantial upside or downside in stocks over the next 1-2 weeks to be reflected in Bitcoin.
— ∞ CO฿IE (@CryptoCobain) April 19, 2021
Some positive elements can be seen in USDT prints suggesting the market has “de-risked,” the Mayer Multiple at the lowest it has been since $19k in Dec., the Bitcoin Utilisation Indicator being green, and Dynamic Range Network-Transaction Value (DNTV) also showing green on the 4HR which the four other times this occurred in 2021 marked local bottoms.
A healthy correction is to allow for continuation because “when everyone is “long” and there are no more “sellers” to trade into, the market tops out.”
Greed, however, continues to be the dominant sentiment, with the Fear and Greed index printed 80, suggesting high levels of greed in the market.
The bottom line, according to Edwards, is that on-chain fundamentals point to the “current price being a great buy opportunity and institutional banking adoption is still relatively low,” with RSI confirming a local buy opportunity.