Bitcoin (BTC) starts a new week on shaky ground after its lowest weekly close in two years.The largest cryptocurrency, considerably weakened after las
Bitcoin (BTC) starts a new week on shaky ground after its lowest weekly close in two years.
The largest cryptocurrency, considerably weakened after last week’s implosion of exchange FTX, continues to grapple with the fallout.
In what is becoming an increasingly erratic market, investors are unsure what will happen next as more firms sound the alarm over solvency and regulators step up investigations in 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 gets to grips with major losses and ongoing volatility.
Crypto braces for fresh FTX fallout
While little is for certain in the current crypto market environment, it is safe to say that FTX and its aftermath is now the number one source of Bitcoin price volatility.
The weekly chart says it all — a -$5,500 “red” candle for the seven days through Nov. 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 that close — $16,300 reappearing as a relief bounce after the pair wicked 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 forecast, there may be repeat performances in the coming days and weeks as the knock-on effects put more and more crypto names out of business.
Exchanges are particularly on the radar, with Crypto.com, Kucoin and others becoming the source of suspicion over liquidity.
On the day, a spike in withdrawal transactions at Crypto.com and Gate.io led to warnings that it may be the latest exchange seeing a “bank run” as investors seek to take control of their funds.
Data from on-chain analytics firm CryptoQuant showed 1,500 BTC leaving Gate.io on Nov. 13, with Nov. 14 currently at nearly 800 BTC and rising.
More broadly, data showed exchange BTC reserves at an estimated 2.09 million BTC, CryptoQuant noting that due to the turmoil it may not reflect the true state of affairs.
The last time that reserves were so low was in early 2018.
Bitcoin bounces from $15,700 as Musk puts faith in BTC
Against the backdrop of ongoing uncertainty, making BTC price predictions is thus no easy task.
Turning to the moving average convergence divergence (MACD), analyst Matthew Hyland warned that the BTC/USD 3-day chart was about to repeat a bearish setup, which led 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 closes. Previous two crosses in the past year resulted in further downward price action.”
Hyland nonetheless noted that after the 2014 Mt. Gox hack, 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 up,” he added.
Fellow analyst Il Capo of Crypto meanwhile argued that the market was prepared for a “final capitulation,” which may come sooner rather than later.
This, he said in a series of tweets, would come in the form of a “bull trap” first then firm rejection, sending the market to new lows.
For altcoins, he said, the comedown would amount to “40-50% on average.”
On shorter timeframes, popular trader Crypto Tony feared that even the lowest weekly close in two years might fail to hold as support.
“Nice breakout, but if we cannot hold the swing low at $16,400 then this was just a fake out and we wait for a test lower,” he commented about the recovery from $15,780 intraday lows.
The move came as Twitter CEO, Elon Musk, came out in tacit support.
“BTC will make it, but might be a long winter,” he wrote on the day in a Twitter debate.
A further short-term price catalyst came in the form of largest exchange Binance opting to create a dedicated recovery fund to help shield businesses.
Quiet macro week sees focus on stocks 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 shedding in excess of 25% in days, United States stock markets recovered from losses earlier in the month.
As…
cointelegraph.com