Market Wrap: Bitcoin Tumbles to $9.8K; Investors Continue Plowing Crypto Into DeFi
Bitcoin is in bear territory for the third straight day and investors are still looking to DeFi to capture gains during the dump.
- Bitcoin (BTC) trading around $10,606 as of 20:00 UTC (4 p.m. ET). Slipping 0.90% over the previous 24 hours.
- Bitcoin’s 24-hour range: $9,894-$10,081
- BTC below its 10-day and 50-day moving averages, a bearish signal for market technicians.
Bitcoin’s price dropped below $10,000 Friday, sliding as low as $9,894 on spot exchanges such as Coinbase.
“It’s not the best look for BTC from a momentum and positive volume standpoint, to be honest,” said Constantine Kogan, partner at crypto fund of funds BitBull Capital.
Related: First Mover: Buying Bitcoin’s Dip, Betting Against Tether and Weighing the Jobs Report
David Lifchitz, chief investment officer for crypto quantitative firm ExoAlpha, says traders are taking profit after bitcoin could not get past $12,100. It may seem like a long time ago but the price went as high as $12,058 only Tuesday.
Lifchitz added that a few more fundamental factors that might be influencing the bearish bitcoin run.
Related: Binance Eyes Uniswap’s Lunch With Launch of Centralized ‘Swaps’ Platform
“We observed that the market started to fade as South Korea’s largest exchange, Bithumb, had been raided by police,” he noted.
“It could also be miners deciding to monetize their rewards,” Lifchitz added. Indeed, bitcoin holders, which could include larger holders such as miners, are pushing more inflows into exchanges to its highest levels since late July.
“In my opinion, this is a classic case of an overstretched market, which had advanced too much too quickly, and so was in dire need of consolidation,” said Jean-Marc Bonnefous, managing partner of multi-asset manager Tellurian Capital. “Crypto is dropping in sympathy with other traditional risk assets,” he added.
Equities indexes were in the red Friday:
- Asia’s Nikkei 225 closed down 1.1% as major stocks in the pharmaceuticals, consumer staples and technology sectors fell.
- Europe’s FTSE 100 ended the day slipping 0.88% as Bank of England officials forecast an economic downward trend for the balance of 2020.
- The United States’ S&P 500 lost 0.50% after the index fell as low as 3.1% in early trading on dropping tech sector stocks but rallied later, with the banking sector eking out gains.
Alessandro Andreotti, an Italy-based crypto over-the-counter trader, is optimistic despite the currency cryptocurrency market environment. “Bitcoin has been extremely oversold. It actually reminds me of the March crash,” he said. “But, honestly, I think it can bounce back after this drop.”
Ether (ETH), the second-largest cryptocurrency by market capitalization, was down Friday, trading around $392 and slipping 2.5% in 24 hours as of 20:00 UTC (4:00 p.m. ET).
Yields in DeFi may become important to crypto traders should the market continue to show bearish signals: Ether locked in DeFi is up, from 5 million to 6.9 million in the past week, a 35% increase.
Investors also continue to lock bitcoin into decentralized finance. There are now over 74,000 BTC in use on Ethereum as those who lock in bitcoin gain a yield or profit in the DeFi ecosystem. In the past week, the amount of bitcoin in DeFi has increased 33%.
“An amazing amount of BTC is locked into DeFi, earning hodlers ‘dividends’ for simply owning the asset,” noted Henrik Kugelberg, a Swedish crypto over-the-counter trader.
- eos (EOS) + 4.5%
- neo (NEO) + 0.22%
Notable losers as of 20:00 UTC (4:00 p.m. ET):
- tron (TRX) – 23.9%
- nem (XEM) – 12.3%
- zcash (ZEC) – 8.9%
- Oil is down 4.2%. Price per barrel of West Texas Intermediate crude: $39.50.
- Gold is in the green 0.25% and at $1,935 as of press time.
- U.S. Treasury bonds yields all climbed Friday. Yields, which move in the opposite direction as price, were up most on the 10-year, in the green 11.2%.
- Market Wrap: Bitcoin Tumbles to $9.8K; Investors Continue Plowing Crypto Into DeFi
- Market Wrap: Bitcoin Tumbles to $9.8K; Investors Continue Plowing Crypto Into DeFi
Author: Daniel Cawrey
Bitcoin market index back to ‘fear’ on 91st anniversary of 1929 crash
Bitcoin (BTC) may be testing $10,000 but further losses would not be unusual, says an asset manager on the 90th anniversary of the Wall St. Crash.
In a tweet on Sep. 4, Raoul Pal said that the past 24 hours’ BTC price declines were nothing out of the ordinary.
“In the post-Halving bull cycles, bitcoin can often correct 25% (even 40% + in 2017), throwing off the short-term traders (or giving swing traders a shot at the short side),” he wrote.
“Each of those was a buying opportunity. DCA opportunity ahead?”
Pal was referring to dollar-cost averaging investing, which involves buying a set amount of Bitcoin at regular intervals to slowly build up a portfolio.
As Cointelegraph noted, the practice has seen proven profitability for BTC, and payment network Square rolled it out as a consumer feature this year.
Comparing Thursday’s losses even to recent drawdowns from local highs, Bitcoin has fared less badly in context than price indices would suggest.
Bitcoin price drawdowns comparison. Source: ChartsBTC/ Twitter
A knock-effect of the losses was nonetheless a dramatic shift in investor sentiment, according to the Crypto Fear & Greed Index. The Index, just days ago firmly in its “greed” zone, fell by more than 30 points out of 100 on Friday to stand at 40 or “fear” for the first time since July.
Crypto Fear & Greed Index as of Sept. 4, 2020. Source: Alternative.me
While analysts continue to eye the potential for BTC/USD to drop to fill a futures gap at $9,700, across macro markets, eerie historical signs are appearing.
As noted by commentator Holger Zschaepitz on Friday, Sept. 4 marks 91 years to the day that markets began their rapid descent during the Wall. St. Crash.
“Just to put things into perspective: After the fabulous gains on the stock market in the 1920s, the crash began just on Sep4th, 1929!” he tweeted.
Just like 2020, the event followed several months of recovery in equities, with economist Irving Fisher infamously saying just beforehand that stocks had “reached what looks like a permanently high plateau.”
Zschaepitz’s words come as others warn about the health of gold, silver and the U.S. dollar currency index. In the case of the latter, after days of gains which coincided with Bitcoin price selling pressure, resistance is incoming, Cointelegraph Markets analyst filbfilb says.
“Careful with this dump, he cautioned subscribers of his Telegram trading channel.
“The other markets are on their last legs. If they survive then we probably do OK here. If they mega dump; you do not want to be heavily leveraged to the longside.”
U.S. dollar currency index daily chart. Source: TradingView
At publication time, Bitcoin traded at around $10,400 after a modest rebound from lows of $10,090, with daily losses still at almost 9%.
Bitcoin Cash, Synthetix, VeChain Price Analysis: 4 September (AMBCrypto)
The effects of Bitcoin’s recent collapse were far-reaching, with many of the market’s altcoins noting repercussions on their own price charts. The likes of Bitcoin Cash, Synthetix, and VeChain weren’t immune to these effects either, with all the value of all these alts falling dramatically. It should be noted, however, that the depreciation in the value of the world’s largest cryptocurrency also snuffed out a lot of the momentum most of these altcoins had. At press time Bitcoin was being traded at $10,458 after having endured a 3.45 percent drop over the past 24-hours.
Bitcoin Cash [BCH]
One of the crypto-market’s most popular fork coins, Bitcoin Cash was one of the alts that fell significantly on the back of Bitcoin’s own depreciation. While BCH did fall by almost 25% on the charts, it should be noted that the same was preceded by a hike that saw BCH climb by 11%. Owing to these developments, Bitcoin Cash was continuing to trade at its June-July 2020 levels, with all of its August 2020 gains wiped out, at the time of writing.
The nature of BCH’s movement over the past month shared similarities with its larger movement over the rest of the year, with BCH registering YTD gains of just over 9%
While the Parabolic SAR’s dotted markers were well above the price candles and pointed to a bearish market, the MACD line was well under the Signal line on the charts.
On the community side, Bitcoin Cash has been at the center of a lot of debate, especially since a new blockchain development funding proposal was presented.
Synthetix has been one of the crypto-market’s most talked-about projects over the last few months. However, the pace of the same rose exponentially in the month of August, with SNX soaring on the charts. A major reason behind the soaring popularity of projects like Synthetix is the boom in the DeFi space. This is evident by the fact that at the time of writing, the Total Value Locked in Synthetix was upwards of $750M.
However, like other alts, SNX wasn’t immune to Bitcoin’s fall either. While it fell by 30% over the past few days after touching its new ATH, the TVL figures dropped from well over $1 billion.
The widening mouth of the Bollinger Bands suggested more volatility was expected to come, while the Relative Strength Index highlighted that sellers were gaining momentum in the market.
VeChain, the market’s 28th-ranked cryptocurrency, has performed well over the course of 2020. While its price performance this year hasn’t been as great as the likes of Chainlink or many of the market’s DeFi projects, VET was still noting YTD gains of almost 140%, at the time of writing. Unlike most alts, VET’s growth on the charts since mid-July has been limited to a tight trading channel, with the crypto falling by over 28% on the back of Bitcoin’s most recent depreciation.
Further, at the time of writing, VET was trading at levels last seen in the first week of July, with the crypto very close to its support level.
While the Awesome Oscillator pictured minimum market momentum, the Chaikin Money Flow was well under 0 and pointed to growing capital outflows.
Jibin is a news editor at AMBCrypto. With over three years of experience as a political writer, he primarily focuses on the political impact of crypto developments. A graduate in Law and International Relations, his writing is by and large focused on cryptocurrencies from the political and financial perspective. A Liverpool FC fan. YNWA
Bitcoin daily chart alert – Bulls now in trouble – Sep. 4
(Kitco News) – Bitcoin-U.S. dollar prices late this week sold off sharply and hit a five-week low. Bulls have lost their overall near-term technical advantage and bears have downside momentum. Bulls need to show fresh power soon to stabilize prices. Stay tuned.
By Jim Wyckoff
Even Bitcoin Fundamentals Are Hinting At a Significant Correction Ahead
Bitcoin just had its largest 48-hour pullback since May 2020, back when the asset’s halving took place. The drop in price has the cryptocurrency now trading below a key fundamental level. A deeper dive into other Bitcoin fundamentals may be hinting that a more severe correction that may have only just started.
Here’s what the cryptocurrency’s underlying network metrics are saying about what’s about to come in terms of price action across the crypto market.
Technical analysis across any and all assets is exactly the same: open up a chart, check out the candle structure, and look for any patterns or signals. But when it comes to cryptocurrencies, fundamental analysis is dramatically different.
Fundamental analysis is based on two main concepts: qualitative analysis and quantitative analysis. Qualitative analysis comes down more to if you like a coin’s ticker, or if you prefer a Justin Sun against a Vitalik Buterin, for example.
In terms of quantitative analysis, rather than reviewing company revenue reports for tips on stock valuation changes, crypto analysts look at on-chain data and other barometers that measure the health of the underlying blockchain network.
In Bitcoin, this includes how much BTC is held in wallets or on exchanges, metrics like energy value and production costs, hash rate, difficulty, and network-to-transaction ratios.
These fundamentals unique to Bitcoin and crypto make things a bit more tricky, but thanks to contributions from the likes of Willy Woo and Charles Edwards, these metrics have been turned into TA tools.
BTCUSD Daily Energy Value 2016 - 2020 Comparison | Source: TradingView
By adding these metrics to Bitcoin price charts, it can reveal some compelling signals. The chart above depicting Bitcoin’s energy value shows the first major weekly close below the indicator after quickly poking above it. The last time the cryptocurrency peeked its head above this level then abruptly fell below, was in June 2019, and it signaled a top.
Comparing the past bear market turned bull with whatever is currently going on in crypto, shows a similar initial pump from the bottom that got overheated too soon. The next time Bitcoin went slightly above this metric on weekly timeframes, the cryptocurrency had a 40% post-halving selloff.
This year’s halving came and went, but no death spiral ever arrived. However, energy value is just one signal that is suggesting it could still be coming.
The cost of producing each BTC is now above the market price the cryptocurrency is trading at. When this happens, miners are better off buying – so instead, they sell.
The post-halving death spiral last time around was due to capitulating miners. Rising fees may have staved this off for some time, but miners have begun moving an “usually” large sum of BTC to exchanges.
The Hash Ribbons have started turning down once again, and when they do, it signals that such a capitulation event is taking place. Past instances of this, line up with the recent Black Thursday bottom, and the 2018 bear market bottom. It also matches the last post-halving death spiral, and it looks a lot like what’s about to happen next.
BTCUSD Daily Production Cost & Hash Ribbons 2016 - 2020 Comparison | Source: TradingView
Finally, the last fundamental signal in Bitcoin that things aren’t looking so hot in the short-term, is the NVT ratio. NVT stands for network-to-transactions. This ratio compares Bitcoin’s price in relation to the total value being transacted across its network.
NVT recently got hot, similarly to the February 2020 peak, the June 2019 top, right before the drop to Bitcoin’s bottom, and before that when the asset hit $20,000. Now, it is back, and it’s no longer red.
BTCUSD Daily NVT Ratio Past Top Comparisons | Source: TradingView
When prices drop and NVT ratio turns back to black, some type of drop has followed. The furthest back was a 70% collapse from $20,000 to $5800 in February 2018. Bitcoin is currently showing a correlation to that particular bottom when compared to the DXY Dollar Currency Index.
The next time this tool triggered, Bitcoin fell over 50% to $3,200 and met what is hopefully the bottom. Next, was in June 2019, and although it took until December to get there, Bitcoin once again bottomed after a 53% drop.
2020 kickstarted a fast recovery to $10,000, but even quicker the cryptocurrency plummeted 62% to $3,800 on Black Thursday. Now, Bitcoin went back above $12,400 where it may have topped again according to the NVT ratio. But the question is – how deep does this drop go?
Taking the four catastrophic collapses, and averaging them out comes to a 58% fall. A dump of that magnitude would take the cryptocurrency back to roughly $5,200. However, given the pandemic, the risk of the coming election, and the aforementioned ominous comparison to the DXY index, there is one more important thing to pay attention to.
According to the NVT ratio, Bitcoin tops out when the indicator turns red. It bottoms when it turns green. The only time the cryptocurrency has turned green since the $20,000 peak was when the crypto asset plunged from $20,000 to $5,800.
Could the latest sighting of red, give us the first glimpse of green before things move up again? And it could it all be due to the comeback of the greenback?
Author: Tony Spilotro