BTC is NOT over and it will move higher from here
It was a brutal week of trading in the digital asset markets with Bitcoin and much of the altcoin market heavily in the red. Bitcoin is down 15% in December currently trades around $47,000. On Friday, December 3rd, the daily high for the asset was around $57,000. Overnight the price collapsed to a low of $43,000. In less than a day, the price of BTC dropped by more than 25%.
A key factor in the weekend price drop was the flushing out of leveraged Bitcoin derivative positions. Glassnode reports that over $5.4B in Futures open interest closed on Saturday. This was over 24% of the market. Data from Coinglass indicates that most of this OI was long positions and this means that a long squeeze contributed to the severity of the price drop on Saturday.
The price dropped below falling wedge and it will be moving in range between the $46,500 and $52,000 zone with lots of volatility till it finally finds a support and starts moving bullish again. It could take a few weeks to recover from a crash like this. Fear & Greed index stands at 18, indicating extreme fear, which is usually a level where new buyers enter the market.
In recent weeks the correlation between the stock market and Bitcoin has been growing. In the last week, the 90-day Pearson correlation coefficient of Bitcoin and the S&P 500 reached 0.356, a high for the year. While BTC has been touted by advocates as an uncorrelated safe-haven asset, in the last few weeks, it has been dragged down by negative macro headwinds, and its reputation as a risk asset.
While Bitcoin’s correlation with the S&P 500 has been rising in the last two weeks, Ethereum’s has fallen. The price of ETH against BTC is approaching three and a half year highs. In a bearish market, ETHBTC would’ve seen a massive sell-off, which is not the case ATM. The change in market direction usually happens with massive greed across the board and with prices on extreme levels, which was also not the case in recent crash. The market should go higher from here, but it will need time to adjust and find support. I think BTC will top out at levels 70k+ and not before.
A key factor in the weekend price drop was the flushing out of leveraged Bitcoin derivative positions. Glassnode reports that over $5.4B in Futures open interest closed on Saturday. This was over 24% of the market. Data from Coinglass indicates that most of this OI was long positions and this means that a long squeeze contributed to the severity of the price drop on Saturday.
The price dropped below falling wedge and it will be moving in range between the $46,500 and $52,000 zone with lots of volatility till it finally finds a support and starts moving bullish again. It could take a few weeks to recover from a crash like this. Fear & Greed index stands at 18, indicating extreme fear, which is usually a level where new buyers enter the market.
In recent weeks the correlation between the stock market and Bitcoin has been growing. In the last week, the 90-day Pearson correlation coefficient of Bitcoin and the S&P 500 reached 0.356, a high for the year. While BTC has been touted by advocates as an uncorrelated safe-haven asset, in the last few weeks, it has been dragged down by negative macro headwinds, and its reputation as a risk asset.
While Bitcoin’s correlation with the S&P 500 has been rising in the last two weeks, Ethereum’s has fallen. The price of ETH against BTC is approaching three and a half year highs. In a bearish market, ETHBTC would’ve seen a massive sell-off, which is not the case ATM. The change in market direction usually happens with massive greed across the board and with prices on extreme levels, which was also not the case in recent crash. The market should go higher from here, but it will need time to adjust and find support. I think BTC will top out at levels 70k+ and not before.