Bitcoing (BTC) dips below key level as diamond hands wobble

Bitcoin traded below a key psychological level on Monday evening, while other major coins also slipped, with the global cryptocurrency market down 4.05% to $888.7 billion at the time of the publication.

Price performance of major coins
Piece of money 24 hours 7 days Price
Bitcoin BTC/USD -3.9% -1.3% $19,981.91
Ethereum ETH/USD -6% -4.8% $1,097.13
Dogecoin DOGE/USD -7.7% -11.2% $0.06

Top 24 hour gainers (data via CoinMarketCap)
Cryptocurrency % change over 24 hours (+/-) Price
Arweave (RA) +3.9% $12.02
Loop (RCL) +1.35% $0.11
Dai (DAI) +0% $1

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Why is this important: Bitcoin was trading below $20,000, while Ethereum was poised to slip below $1,000 at press time as sentiment around risky assets once again deteriorated.

Cryptocurrencies followed weaker stocks on Monday, as the major US S&P 500 and Nasdaq indices ended down 1.15% and 2.26%.

S&P 500 and Nasdaq futures, however, rose 0.04% and 0.01%, respectively, ahead of earnings announcements from major companies.

“Another bear market rally has come and gone and we are now heading into earnings season and another week of major economic reports fearful of what may befall us. The mid-week US inflation data is remarkable, as investors keep their fingers crossed for signs of a price slowdown,” said OANDA senior market analyst Craig Erlam, in a note seen by Benzinga.

Erlam’s colleague at OANDA, Edouard Moya said Bitcoin’s latest bear cycle is poised to test the “historically known 80% declines we would see in past crypto winters.”

“The $14,000 level looks like it could provide significant support if Bitcoin breaks later this week. This week’s inflation report could be the trigger for a final major plunge for cryptos.

The US dollar continued to strengthen as expectations of another interest rate hike grew. At press time, the dollar index – a measure of the greenback’s strength against six of its peers – hit 108.19.

Trader in cryptocurrency Justin Bennett warned on Twitter that people should stop trying to call the dollar index highs, saying the signs point to 120 for the index. Bennett has commented on the inverse relationship between cryptocurrencies and the dollar in the past.

The Chartist Ali Martinez said that Bitcoin has fallen below its 100 hourly moving average to the $19,900 levels and if these do not hold, the losses could extend towards the $19,300 or even 18 levels $630.

Chain analysis firm glass knot says in a note that the long-term holder spent production profit ratio (LTH-SOPR), which indicates the profit ratio captured by long-term Bitcoin holders, shows that the so-called diamond hands are suffering.

An LTH-SOPR value of 2.0 means long-term holders are spending coins at a price that is 2 times their base cost, while a value below 1.0 means investors are making losses or spending parts at a price below their base cost.

Bitcoin LTH-SOPR (30-day moving average) — Courtesy of Glassnode

“LTH-SOPR is currently trading at 0.67, indicating that the average LTH spending coin is locking in a 33% loss,” Glassnode said.

While extreme financial stress and “the fingerprint of widespread capitulation” can be seen, Glassnode said, “there may still be a combination of both temporal pain (duration) and perhaps a additional downside risk to fully test investors’ resolve and allow the market to establish a resilient bottom.”

Read more : Ethereum fees fall below $0.90 for the first time in 2 years

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