The crypto market saw a broad sell-off led by ethereum (ETH) and other major layer 1 competitors falling between 4% and 7% over the past day. The fall led to a spike in liquidations, with some popular traders now speculating that the market could be getting ready for a reversal higher.
Over the past 24 hours, bitcoin (BTC) fell by 3.6% to a price of USD 39,027, while ETH was down by 4.3% to USD 2,916. For the past 7 days, BTC and ETH were down by 7.7% and 9.4%, respectively (as of 10:24 UTC).
As can often be seen during sharp sell-offs in the crypto market, a large number of leveraged derivatives traders were caught on the wrong side of the bet.
At press time, more than USD 35m of leveraged bitcoin long positions had been liquidated since midnight UTC time on Monday. For the crypto market as a whole, the liquidations reached close to USD 134m during the same time period – a level not seen since the major market sell-off on Monday last week.
New support forming, but risks remain
According to the on-chain analytics provider Glassnode, BTC is in the process of forming a new support level at the USD 39,000 to 40,000 level, after being rejected at the USD 47,000 resistance level in late March.
However, the firm warned in a newsletter today that the correlation between bitcoin and traditional risk assets such as stocks remains high, hinting that support levels will not necessarily hold should stock prices fall.
Sentiment turning bearish
The downside risks for the bitcoin price were also reflected in the crypto Fear & Greed Index, which on Monday morning indicated ‘extreme fear’ among market participants.
The current reading marks a worsening in sentiment from Sunday and a further worsening from last week when only ‘fear’ was indicated.
Crypto Fear & Greed Index:
According to crypto exchange Kraken’s latest Intel & Insights report from Friday, “aggressive buy interest” was seen for ETH and Terra’s stablecoin UST last week.
Additionally, the report described buying interest for BTC as “broad” when prices dipped around USD 40,000, strengthening the case for some level of support around this level.
The report also noted that on-chain activity on the Bitcoin network fell during the week, with active addresses falling by 4.4% and the transaction count dropping by nearly 2.1%.
Meanwhile, bearishness could also be sensed from some popular crypto traders on Twitter, with one such user opining that momentum in the market now “looks terrible.”
On the more optimistic side, Michaël van de Poppe, CEO & founder of crypto consultancy Eight, said on Twitter on Monday that the current price level is key for bitcoin’s direction in the near term.
“If this level is lost, I’m looking for new lows and potentially sub USD 30K,” van de Poppe wrote, before saying that he believes chances now are greater for an upside move rather than a further move to the downside.
“[I]f you want to long Bitcoin. This is the area,” the popular crypto trader said.
Similarly, Crypto Ed, another widely followed crypto trader and educator, said in a video update on Monday that he remains optimistic about the bitcoin price for the week.
“Price action will come later this week, and then I do expect some sort of bounce,” said the trading educator, noting that the two technical indicators RSI and MACD are currently showing a “bullish divergence.”
“As long as that holds, that’s an extra sign of an upcoming bounce,” Crypto Ed said.
– Crypto Market Rises Amid ‘Altseason’ Hopes, Some Bitcoin Whales Selling
– Bitcoin & Crypto Fall as Market Awaits US Inflation Numbers, ‘Overvalued’ Tech Stocks Worry Traders
– Bitcoin Lags Behind Ethereum & Altcoins Despite Strike, Robinhood, and Legal Tender News
– Stablecoins See Growth With Crypto Market Stuck in ‘Bearish Lull’
– Crypto Bottom is In and ‘Massive Rally’ Awaits, Pantera Capital Predicts
– Most Cryptos Correlated with Stocks, Not with Gold – Analysts
– Get ‘Mentally Ready’ for Lower Bitcoin Prices as Rates Rise, Bitcoin 2022 Panelists Warn
– Once the Fed Pauses, Bitcoin is ‘Going to the Moon,’ Novogratz Says