Stocks & Gold Getting Hammered But Bitcoin Fundamentals Do Not Support A BTC Crash to $7k
In another red day of the week, Bitcoin dropped to about $10,150 level. Just like the weak price performance, with BTC currently trading around $10,415, volume remains extremely low too, at just above a billion dollars.
During the red market, the market saw popular stablecoin USDT having two separate all-time high outflows from exchanges. “In both cases for these historic spikes, it appears that they foreshadowed large market-wide dumps a few days after they occurred,” observed data provider Santiment.
Moreover, September has also been the highest cumulative month of funds moving to exchanges since March as the market continues to get a beating.
The rest of the crypto market is currently in a mix of reds and greens.
Among the top cryptos, ETH was hit the hardest, which fell under $320. This makes sense, given that DeFi tokens continue to lose.
Notable DeFi losers include Hakka (-25%), PERP (-18.50%), CREAM (-14%), CRV (-10%), SWRV (-7%), and YFI (-5%). A handful of them, however, are still recording gains such as YFL (+37%), UNI (+21%), SUSHI (+12%), DOT (+3%), and SNX (+2%).
DeFi is not the same as the 2017 ICO craze. Back then, money was raised on shitcoin white papers written in a coffee shops. DeFi is already live and working in the wild. Billions of dollars are at work earning positive yield. This isn’t hypothetical vaporware, this is real.
— Cameron Winklevoss (@cameron) September 22, 2020
However, losses might not be over yet as trader Qiao Wang expects this DeFi winter to be an extended one, bearish for 3-6 months over a two-year bull market.
He also noted, “Bulls like to blame negative external factors for killing the bull market. That’s the wrong way to look at it. When the market is depressed, no negative catalyst can crash it even more. When the market is overheated, the tiniest negative catalyst can spook it.”
It baffles that suddenly people are saying macro is driving crypto again, when in reality the entire rally from April to Sept was largely fueled by macro. IMO what's happening is that people tend to (incorrectly) attribute profit to their own ability and loss to external factors.
— Qiao Wang (@QwQiao) September 24, 2020
Following the Macro
According to on-chain analyst Willy Woo, who says fundamentals don’t support bitcoin going down to $7k with a liquidity gap present in 10.8k-11k, this pullback wasn’t the result of the “usual movement of coins on-chain.” Rather the sell-off was fueled by coins on exchanges.
“Without large volumes of coins moving from wallets, I cannot see sufficient sell-side supply to push prices down with much gusto,” he said.
Woo attributed BTC’s downwards move to stocks looking weak and USD gaining strength over the past weekend.
Compared to other asset classes, Bitcoin is actually holding up quite well.
Bitcoin wasn’t the only one that had a bad day; stock markets dumped just as hard. As trader and economist Alex Kruger noted, “Two catchy phrases for today: Risk happens fast (and) Macro matters.”
The market had recovered from last week’s losses when the S&P 500 fell 2.5%, and Dow Jones slid 2.3% on Wednesday.
But it was Nasdaq that was hit the hardest by nearly 3% after data showed domestic business activity slowed down in September. Twitter stocks, however, were the exception.
Gold got hammered as well, down 3.7% since yesterday, falling to $1,850 level. “The support that it's worked so hard to build at $1,900 is toast, as we see a rather well-defined downside breakout,” noted analyst Mati Greenspan who says the precious metal can reach as far as the 200 DMA, currently at $1,721, if the greenback continues its climb.
The US dollar is testing fresh highs and continues to “gradually reassert its dominance.”
The past four days have seen the biggest strengthening of the dollar versus its peers since the March turmoil, as measured by the Bloomberg dollar spot index. pic.twitter.com/l4cxj6EEE5
— Lisa Abramowicz (@lisaabramowicz1) September 23, 2020
As such, “If traditional markets shit the bed, BTC will likely do so as well. If traditional markets start bouncing, BTC will likely outperform,” said analyst DonAlt.