Crypto Market Overview
In yesterday’s market commentary we concluded that a break to the downside seemed very likely after a short consolidation phase, as volumes continued to remain low and bitcoin was making lower highs. During the day, between 1PM and 3PM UTC, bitcoin continued its downfall from around $8,400 to almost $7,700, retraced back to $8,100, and trades now at the psychological $8,000 level.
For the top 10 cryptocurrencies according to market capitalization, we see mild red across the board with losses below 5%. The biggest loser in the top 10 is Stellar [XLM] with -4.49%. This doesn’t come all too surprising as Binance announced yesterday through a company blogpost that it listed XLM among 4 other cryptocurrencies on the Binance.US exchange. Markets usually react bullish to news when bigger exchanges announce the listing of a coin, and what follows after that is a slight pullback according to the saying “buy the rumor, sell the news.”
After the big crash two days ago, several sources confirmed that the massive decline in price was exacerbated by $600 million in liquidations on BitMEX, the world’s largest bitcoin derivatives exchange based on traded volume. $600 million within three hours sets a new record high in the history of liquidations. As BitMEX allows for high leverage trading, high volatility or unexpected changes can make the spot price drop below the liquidation price and thus cause a long squeeze, which happens when traders go long and are forced to sell their contracts as their margin doesn’t allow for more downside in price.
The overall market capitalization of cryptocurrencies dropped by another $7 billion and is currently at $213 billion. Bitcoin dominance decreased slightly and is currently at 67.9%.
Yesterday, we mentioned that the 200 SMA (purple line) could potentially act as support but that if it fails to do so, then BTC might continue its downfall to the 61.8% Fibonacci retracement level, which is around $7,400 to $7,500. In the last couple of hours, the psychological $8,000 level was able to support the price, but as volume and volatility remain low, chances are that BTC might go lower in the short-term. On the bitcoin hourly chart, the 25 EMA (blue line) seems to act as resistance for the time being. If bitcoin falls through $8,000, then the markets could test $7,630 within this week. But should we find strong support around the 61.8% Fib level backed with high volume, then the crypto market might see a short-term retracement up to $8,800.
In general, the crypto markets lack support and are trending downwards. Some of the potential factors that have led to the current situation are the sudden drop in hashrates, which tests the confidence of investors in the underlying technology. As it can be seen on the chart below, the hashrate of the bitcoin network saw a significant plunge on the 24th of September.
In addition, the launch of the Bakkt futures platform couldn’t meet the high expectations of the market, which may have played a part in the recent correction of bitcoin’s price. The 24-hour volume after the launch of the Bakkt futures exchange was only 71 BTC as opposed to 5,298 BTC for CME; which equals to 75x less trading volume.
Lastly, tight range-bound trading decreased during Asian daytime (volatility subsided by 3 basis points), while we observe higher volatility during US daytime (an increase of 10 basis points).
Ethereum experienced a similar drop like bitcoin from $170 levels to $152. But unlike BTC, ETH seems to be rising faster and has almost fully recovered and trades currently at around $166. Similar to bitcoin, the 25 EMA on Ethereum’s hourly chart also emerges as a line of resistance. Next price targets for ETH are the 78.6% Fibonacci retracement level at $157, and, if ETH continues going lower, $146, which acted both as support and resistance in the past. With bitcoin dominance close to 70%, both BTC and all other altcoins are highly correlated at the time being. Thus, ETH as well as all other top 10 cryptocurrencies are very likely to follow bitcoin’s moves.
The top gainers of the day are Bitshares [BTS] with +5.33%, Ravencoin [RVN] with +4.34%, and Loom Network with +3.02%. Loom Network announced on their company Twitter the launch of a bounty program, where millions of LOOM tokens will be given as rewards to bounty hunters and developers.
The top losers of the day are Bitcoin Diamond [BCD] with -10.08%, Bytecoin [BCN] with -9.54%, and Nexo [NEXO] with -9.33%. No news was found that supports the price drop of these cryptocurrencies.
News of the Day
- U.S. House Passes Bill Requiring Study Of Blockchain Technology – Forbes
- Bitcoin Price Sees Second Sharp Decline This Week, Falling Below $8,000 – Forbes
- Bitcoin Chaos Continues As Facebook’s Mark Zuckerberg Reveals Libra Woes – Forbes
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