Bitcoin reclaims $20,000 after weekend bloodbath but downside risks linger – Cryptocurrency News



Last weekend, Bitcoin collapsed to $17,590, marking the first time ever that the king of cryptocurrencies has fallen below its previous cycle's high. Moreover, Bitcoin is challenging its historical records as it is trading below its 200-week simple moving average (SMA), which was essentially the bottom of all its previous bear markets. Although monetary tightening and regulatory woes continue to undermine cryptocurrencies’ prospects, investors are increasingly tilting towards the idea that the market is currently hovering near its bottom. Does the recent bounce indicate that history will repeat itself or is there further downside on the menu?

Macro headwinds weigh on cryptos

Since the beginning of 2022, a barrage of negative developments has negatively affected the performance of risky assets. The persistently high inflation that is increasingly eroding people’s disposable income combined with the aggressive monetary tightening and mounting fears over a recession have dented investors’ risk appetite.

On top of that, the recent sell-off has triggered a massive round of liquidations to cover margin calls, which has further deteriorated the downfall. Specifically, investors who stepped into the market with leverage have been forced to offload their positions, while companies that used cryptocurrencies as collateral for granting loans have suffered the same fate. This debt swirling around crypto markets has amplified recent declines, which are further bolstered by constrained liquidity as crypto exchanges have been suspending transfers and withdrawals.

Cryptocurrency industry jitters accelerate fall

Many cryptocurrency-related companies have announced mass layoffs amid fears of an upcoming ‘crypto winter’, which is anticipated to deal a significant blow to their financial performance. More precisely, the US exchange platform Coinbase announced that it is going to sack 1,100 employees due to the broader market downturn. Furthermore, Gemini, a cryptocurrency exchange is planning to reduce its workforce by 10%, while the online app Crypto.com will cut 5% of its staff.

Additionally, following Celsius and Binance, Babel Finance - a Hong Kong-based crypto lender - paused withdrawals and redemptions, citing unusual liquidity pressures. Also, a crypto hedge fund called Three Arrows failed to meet its margin calls from lenders, fueling rumours that many crypto-related firms might suffer collateral damage. Overall, as crypto companies continue to face operational crackdowns and fire personnel, investors’ sentiment towards cryptos could continue to deteriorate.

The first short Bitcoin ETF

Eight months after establishing the first US Bitcoin ETF, the investment provider ProShares announced on Monday that it plans to launch the first short Bitcoin-linked ETF by next week. This investment vehicle will be designed to allow investors to gain from declines in Bitcoin’s price or enable them to hedge their spot crypto holdings.

Is this the bottom?

The recent sharp sell-off in crypto markets caused Bitcoin’s price to fall to a fresh 2022 low and slash through its 200-week SMA for the first time since March 2020, before bouncing back slightly.

Should negative momentum strengthen, the recent low of $17,590 may act as the first line of defense. Failing to halt there, the price could descend to form fresh multi-year lows and the next crucial barrier could be met at the August 2020 resistance of $12,500.  

To the upside, bullish actions might encounter initial resistance at the 200-week SMA, currently at $22,330. An upside violation of the latter may open the door for the $28,737 level, which is the 61.8% Fibonacci retracement of the 3,850-68,999 upleg. 

Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.

Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.

Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.

Gumagamit kami ng cookies para mabigyan ka ng mahusay na karanasan sa aming website. Magbasa pa o palitan ang iyong cookie settings.

Babala sa Risk: Maaaring malugi ang iyong kapital. Maaaring hindi nababagay sa lahat ang mga produktong naka-leverage. Mangyaring isaalang-alang ang aming Pahayag sa Risk.