Bitcoin takes a breather after Monday’s strong selloff – Crypto News
September 15, 2023 12:27 pm
Bitcoin dropped below 25,000 on Monday for the first time since June
Quickly reclaimed 26,000 amid broader risk-on sentiment in markets
The formation of a death cross in the daily chart darkens outlook
Bitcoin recovers from 3-month low; caution ahead
On Monday, the price of Bitcoin declined below the 25,000 mark for the first time since June 16 in the absence of any major catalyst. A potential factor behind this meaningful sell-off was the anticipation of a court decision on Wednesday, which would determine whether the defunct FTX exchange would be allowed to sell its 3.4$ billion worth of crypto holdings. Even though the bankrupt crypto exchange was given the green light to proceed with the sale of its assets, crypto prices shrugged off that risk and have been edging higher following the court ruling.
Since Tuesday, digital assets have been moving higher in tandem with stocks, suggesting that macroeconomic forces and their risk-sensitive status have taken the driver’s seat. For example, on Friday, cryptos reacted positively to the Chinese upbeat retail sales and factory output data, indicating a recoupling correlation with equities. However, crypto enthusiasts should not be very optimistic as the latest advance has only pushed Bitcoin within the range that it has been trading for the past month, way below its 2023 highs.
Asymmetric risks on the horizon
To avoid excess stress in the crypto sphere, FTX is planning to offload its holdings in small lots, capping its sales at $100 million worth of tokens per week. FTX’s inventory mainly includes Bitcoin, Ethereum and Solana. Understandably, this action will act as a constant downside pressure in crypto prices, amplifying negative movements and curtailing upward spikes.
Besides that, the macroeconomic backdrop does not seem to provide any aid to cryptocurrencies and risky assets in general, with stronger-than-expected inflation and retail sales data from the US this week, reinforcing once again the likelihood of interest rates remaining higher for longer. In such a scenario, digital coins could be more vulnerable than stocks as elevated interest rates coupled with the US economy’s relative outperformance could boost the greenback, whose price is inversely related to that of cryptocurrencies.
Bulls defy formation of bearish pattern for now
Apart from a deteriorating fundamental picture, Bitcoin’s technical outlook has also turned negative after the completion of a death cross between the 50- and 200-day simple moving averages (SMAs) in the daily chart. January 2022 was the last time this bearish technical signal was observed, with the price plummeting 65% before starting to recover.
Nevertheless, in the near term, the price action seems to be neglecting the technical signal, recording a solid rebound from its recent three-month low and stabilizing above the 26,000 mark.
To the upside, BTCUSD could advance towards the August resistance of 28,140 before the 30,000 psychological level is tested.
Alternatively, bearish actions could send the price to challenge the May low of 25,785 ahead of the June bottom of 24,750.
Bitcoin dropped below 25,000 on Monday for the first time since June
Quickly reclaimed 26,000 amid broader risk-on sentiment in markets
The formation of a death cross in the daily chart darkens outlook
Bitcoin recovers from 3-month low; caution ahead
On Monday, the price of Bitcoin declined below the 25,000 mark for the first time since June 16 in the absence of any major catalyst. A potential factor behind this meaningful sell-off was the anticipation of a court decision on Wednesday, which would determine whether the defunct FTX exchange would be allowed to sell its 3.4$ billion worth of crypto holdings. Even though the bankrupt crypto exchange was given the green light to proceed with the sale of its assets, crypto prices shrugged off that risk and have been edging higher following the court ruling.
Since Tuesday, digital assets have been moving higher in tandem with stocks, suggesting that macroeconomic forces and their risk-sensitive status have taken the driver’s seat. For example, on Friday, cryptos reacted positively to the Chinese upbeat retail sales and factory output data, indicating a recoupling correlation with equities. However, crypto enthusiasts should not be very optimistic as the latest advance has only pushed Bitcoin within the range that it has been trading for the past month, way below its 2023 highs.
Asymmetric risks on the horizon
To avoid excess stress in the crypto sphere, FTX is planning to offload its holdings in small lots, capping its sales at $100 million worth of tokens per week. FTX’s inventory mainly includes Bitcoin, Ethereum and Solana. Understandably, this action will act as a constant downside pressure in crypto prices, amplifying negative movements and curtailing upward spikes.
Besides that, the macroeconomic backdrop does not seem to provide any aid to cryptocurrencies and risky assets in general, with stronger-than-expected inflation and retail sales data from the US this week, reinforcing once again the likelihood of interest rates remaining higher for longer. In such a scenario, digital coins could be more vulnerable than stocks as elevated interest rates coupled with the US economy’s relative outperformance could boost the greenback, whose price is inversely related to that of cryptocurrencies.
Bulls defy formation of bearish pattern for now
Apart from a deteriorating fundamental picture, Bitcoin’s technical outlook has also turned negative after the completion of a death cross between the 50- and 200-day simple moving averages (SMAs) in the daily chart. January 2022 was the last time this bearish technical signal was observed, with the price plummeting 65% before starting to recover.
Nevertheless, in the near term, the price action seems to be neglecting the technical signal, recording a solid rebound from its recent three-month low and stabilizing above the 26,000 mark.
To the upside, BTCUSD could advance towards the August resistance of 28,140 before the 30,000 psychological level is tested.
Alternatively, bearish actions could send the price to challenge the May low of 25,785 ahead of the June bottom of 24,750.
Related Posts: