Bitcoin’s drop to $ 30,305 has been intensified with the liquidation of leveraged long derivatives; option traders are totally pessimistic about ether, Ethereum’s native asset.
- Bitcoin (BTC) is trading around $ 33,277 as of 21:00 UTC (16:00 ET). It fell 10.9% in the last 24 hours.
- Bitcoin 24-hour range: $ 30,305- $ 38,947 (CoinDesk 20)
- BTC above 10 am, but well below the 50-hour moving averages on the hourly chart, a side downside signal for market technicians.
Bitcoin’s price has plummeted in the past 24 hours, from $ 38,947 at 22:00 UTC (5 pm ET) on Sunday to as low as $ 30,305 at 17:00 UTC (12 pm) on Monday, according to data from CoinDesk 20. In a 19-hour interval, the world’s oldest cryptocurrency fell $ 8,642, a loss of more than 22%. Since then, the price has risen slightly, but not much, to $ 33,277 so far.
Read More: Bitcoin’s big fall again coincides with the dollar’s rise in the Forex markets
“Bitcoin is seeing a setback in its steep rise, something I am sure some traders welcome, having felt that they missed the opportunity to increase weakness,” noted Katie Stockton, an analyst at Fairlead Strategies.
Stockton still maintains her forecast last week that bitcoin’s “support” level is somewhere below $ 25,000, where she expects traders to flood the market with purchase orders and raise the price. “It is difficult to discern where support will ultimately be discovered at various levels of importance starting at $ 25,000, but it is not likely to happen immediately due to overbought conditions.”
The derivatives market has exacerbated the fall of bitcoin, according to Jason Lau, director of operations for the San Francisco-based cryptocurrency exchange OKCoin. “The general correction of the market was perpetuated by a long tightening of highly leveraged derivative positions,” Lau told CoinDesk.
According to data aggregator Bybt, Sunday was by far the biggest settlement day in three months, with Binance alone processing more than $ 500 million in long-term settlements, the cryptocurrency version of a margin call.
However, the settlement of bitcoin is not necessarily a bad thing for cryptocurrency, according to some market observers.
“Today’s fall must be seen as a healthy correction by smart institutions [that] bought BTC from $ 20,000 to $ 30,000, ”noted David Lifchitz, chief investment officer at quant ExoAlpha. “A worrying sign that we discussed with our investors was not that the price of bitcoin was rising, but its speed, the speed with which it moved and the range of daily movements.”
In fact, as bitcoin makes huge price gains and subsequent losses, as it did on Monday, the volatility factor in the market is magnified. This led to an increase in the oldest cryptocurrency’s 30-day volatility metric to 71.9%, a level not seen since June 5, 2020.
Despite the decline, Rupert Douglas, head of institutional sales for custody cryptography provider Koine, remains firmly optimistic. “The market doubled from the previous high in a few weeks,” said Douglas. “It is very unusual for a market to behave the way it is (but) I think we are going to go up a lot more, over $ 500,000 by 2023.”
Although this is a rather optimistic proclamation of the future price of bitcoin, Douglas also noted the notorious volatility of bitcoin. “There will be sudden reversals along the road, so buy falls, not high.”
The Ether option reaches targeting below $ 1,000
The second largest cryptocurrency by market capitalization, ether (ETH), fell on Monday, trading around $ 1,018 and falling 19% in 24 hours from 21:00 UTC (4:00 pm ET).
Read More: Aragon One CEO resigns in protest against ‘governance’ decisions
Ether options traders appear to be hovering, like crows looking for bright things, over the possibility of the asset sinking further. The biggest open strike in the ether options market was $ 400 on Sunday, followed by $ 480 and $ 800, according to data analyst Skew.
Denis Vinokourov, head of research at crypto brokerage Bequant, also noted that traders are probably hedging these bets, at least with some open contracts on call options, giving the buyer the right, but not the obligation, to buy for $ 1,920. “The $ 1,920 purchase strike on January 29 is particularly active today when compared to other options. This suggests another round of strong buying for the second largest crypto asset. “
Other markets
The digital assets in CoinDesk 20 are all red on Monday. Notable losers as of 21:00 UTC (16:00 ET):
Read More: Exchange Bakkt to become publicly traded at $ 2.1 billion valuation through merger
- Oil fell 1%. Price per barrel of West Texas Intermediate crude: $ 52.08.
- Gold was at 0.20% red and $ 1,844 at the time of this publication.
- Yield on 10-year US Treasury bonds rose on Monday, jumping to 1,138 and, in the green, 1.4%.
