Elon Musk Says BTC ‘Will Make It’ – 5 Things to Know in Bitcoin This Week
Bitcoin (BTC) starts another week on shaky ground after its lowest weekly close in two years.
The largest cryptocurrency weakened significantly after last week’s implosion of the exchange FTX, continues to struggle with the fallout.
In what is becoming an increasingly erratic market, investors are uncertain about what will happen next as more firms sound the alarm over solvency and regulators step up investigations into the crypto space.
The mood among the majority is intensely fearful, and even some of the industry’s best-known names warn that it has been set back several years as a result of last week’s events.
At the same time, for Bitcoin it is business as usual. FTX is not the first such debacle it has weathered, and under the hood the network remains as robust as ever.
Cointelegraph takes a look at the factors set to influence BTC price action in the coming days, as the average hodler comes to grips with heavy losses and ongoing volatility.
Crypto braces for fresh FTX fallout
While little is certain in the current crypto market environment, it is safe to say that FTX and its aftermath are now the number one source of Bitcoin price volatility.
The weekly chart says it all – a “red” candle at -$5,500 for the seven days through November 13 to the lowest weekly close since mid-November 2020, data from Cointelegraph Markets Pro and TradingView shows.
At the time of writing, BTC/USD is still around the close – $16,300 re-emerging as a relief after the pair dropped to just $15,780 on Bitstamp overnight.
The story is far from over when it comes to FTX, as firms with exposure to the exchange and related entities find themselves in trouble.
As such, commentators predict, there could be repeated performances in the coming days and weeks as the knock-on effects put more and more crypto names out of business.
Exchanges are especially on the radar, with Crypto.com, KuCoin and others becoming the source of suspicion for liquidity.
On the day, an increase in withdrawal transactions on Crypto.com and Gate.io led to warnings that it could be the last exchange to see a “bank run” as investors seek to take control of their funds.
Data from on-chain analytics firm CryptoQuant showed that 1,500 BTC left Gate.io on November 13, with November 14 at nearly 800 BTC and growing.
More broadly, data showed exchange of BTC reserves at an estimated 2.09 million BTC, and CryptoQuant noted that due to the turmoil, that may not reflect the true state.
The last time reserves were this low was in early 2018.
Bitcoin bounces from $15,700 as Musk puts faith in BTC
Against the backdrop of ongoing uncertainty, therefore, making BTC price predictions is no easy task.
Regarding the moving average convergence divergence (MACD), analyst Matthew Hyland warned that the BTC/USD 3-day chart was about to repeat a bearish setup, leading to losses both times it appeared in 2022.
“Bitcoin 3-Day MACD is in position to cross Bearish tomorrow for the first time since April,” he wrote:
“It can be avoided if BTC can get positive price action before the 3-day close. Two previous crosses in the last year resulted in further price decline.”
Hyland nonetheless noted that after Mt. Gox hack in 2014, Bitcoin took almost a year to find a macro price bottom after the initial shock.
“It hasn’t even been 11 days since FTX closed,” he added.
Fellow Crypto analyst Il Capo, meanwhile, claimed the market was prepared for a “final capitulation,” which could come sooner rather than later.
This, he said in a series of tweets, would come in the form of a “bull trap” first and then a firm rejection, sending the market to new lows.
For altcoins, he said, the decline would amount to “40-50% on average.”
On shorter time frames, popular trader Crypto Tony feared that even the lowest weekly close in two years could not hold as support.
“Nice breakout, but if we can’t hold the swing low at $16,400 then this was just a false out and we’re waiting for a test lower,” he commented on the recovery from the $15,780 intraday lows.
The move came as Twitter CEO Elon Musk came out with tacit support.
“BTC will make it, but could be a long winter,” he wrote on the day in a Twitter debate.
A further short-term price catalyst came in the form of the largest exchange, Binance, choosing to create a dedicated recovery fund to protect businesses.
Quiet macro week sees focus on equity correlation
The picture outside of crypto further underscores the extent to which FTX has marked a “black swan” event for the industry.
While Bitcoin and altcoins were busy losing over 25% in days, US stock markets recovered from losses earlier in the month.
As such, as research firm Santiment notes, there is a clear divergence between Bitcoin and risk assets, helping to break a correlation that has lasted throughout the past year.
“As the trading week ends, the story of the week is the distinct divide between crypto (following FTX’s fall from grace) and stocks,” it in summary in a tweet last week:
“Should the confidence of $BTC traders recover after unfortunate events, a bullish divergence forms with the SP500.”
Market commentator Holger Zschaepitz additionally noted the widening gap in the performance of Bitcoin versus the Nasdaq.
“Gap in weekly performance of sliding Bitcoin, giving Nasdaq biggest since 2020. Crypto universe shrank to equivalent of 1% of global stocks,” part of new comments read on the day.
The declining correlation could come at a useful time macro-wise, as US dollar strength makes some erratic moves of its own.
The US dollar index (DXY), after trying to get back to 107, failed before the Wall Street open on November 14, with the implication that risk assets would rise as a result.
Any throwback to recent highlights and the picture can quickly look very different.
However, the intraday DXY declines sent the index back to support that has not been tested since mid-August.
However, commenting on the long-term performance, popular trading outfit Stockmoney Lizards said the DXY had broken a parabolic curve since 2021.
“Correction will be good for Bitcoin,” comments a section of Twitter added.
“Buy the dip” fever hits when miners sell off
While many existing hodlers are trying to withdraw coins from exchanges or figure out how to nurse losses, not everyone is sitting still.
On-chain data suggests that when BTC/USD hit multi-year lows last week, both large and small investors took the opportunity to “buy the dip.”
According to chain analysis firm Glassnode, wallets containing between 1 and 10 BTC saw a dramatic increase.
The trend also appears to be playing out among the largest cohort of hodlers, the “mega whales” of Bitcoin. Those devices with a wallet balance of 10,000 BTC or more are also growing, now numbering nearly 130, Glassnode shows.
“Whales are accumulating at a pace never seen before,” popular social media commentator Crypto Rover reacted.
One group that is certainly not in accumulation mode at the moment are miners. After a sharp reduction in their reserves last week, BTC powered by miners tracked by CryptoQuant is still trending downward.
From 1,858,271 BTC on November 8th, miners’ reserves now stand at 1,853,606 BTC at the time of writing on November 14th.
Despite this, reserves are still higher than at the start of 2022, and recent sales make up an insignificant part of the miners’ overall position.
Sentiment data offers little hope
Predictably, the general mood of the crypto market took a big hit thanks to FTX – but is it really that bad?
Related: $3 billion in Bitcoin left exchanges this week amid FTX contagion fears
According to the Crypto Fear & Greed Index, the industry can actually take a ton of bad news in its stride.
Over the weekend, the index’s score hit a local low of 20/100 – firmly characterizing market sentiment as one of “extreme fear”.
That represents a 50% drop from the peak of 40/100 set on November 6, marking a three-month sentiment high.
Nevertheless, 2022 has seen much lower scores, with fear and greed reaching just 6/100 during the year.
Should further fallout hit, even another 50% dive from current levels will only take sentiment to the area that normally marks macro price bottoms for BTC/USD – around 10/100.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade involves risk, you should do your own research when making a decision.
