Bitcoin resilient as FTX contagion spreads further into crypto space – Cryptocurrency News

It has been another volatile week for crypto markets as the fallout from FTX’s collapse continues to rattle several crypto-related firms, increasing the broader uncertainty and undermining investor sentiment towards digital assets. Surprisingly, Bitcoin has been holding its ground and even realising some gains despite increasing systemic woes and deteriorating macro conditions.  Are cryptocurrencies slowly getting out of the woods?

Knock-on effects persist

FTX’s failure has sent shockwaves across the crypto universe, causing cascading blow-ups of several crypto-related companies. The latest victim of FTX’s fallout was BlockFi, which filed for bankruptcy on Tuesday, citing business failures stemming from the collapse of both FTX and Alameda Research. Even though BlockFi’s bankruptcy was partially anticipated considering its significant loan exposure to FTX, crypto traders appear convinced that contagion has spilled over to other smaller players in the industry.

In addition, bad news does not seem to be ending here as the crypto world has shifted its attention to the struggling crypto brokerage Genesis, which is thought to be on the verge of collapsing. To make matters worse, Bitfront, a US crypto exchange backed by Japanese social media firm Line Corp has suspended new registrations and credit card payments, suggesting that it could be the next piece in the ongoing bankruptcy domino within the crypto environment.

Cryptos fight back

Amid all this turbulence, Bitcoin managed to post a fresh two-week high slightly above the $17,000 mark, dragging most altcoins higher. Furthermore, on Tuesday, the Crypto Fear & Greed Index exited the ‘extreme fear’ zone for the first time in three weeks, endorsing a broader improvement in investor sentiment. Could we have a sustainable rebound before FTX’s fallout is fully contained?

Market participants seem hesitant to restate their trust in digital assets as long as there is no intervention by regulators to impose a strict framework that would protect them from frauds and hacks. Hence, the latest relief bounce is mainly attributed to dip-buying strategies and leverage shorts covering. A short covering is essentially when traders buy an asset that they have already shorted to cover their position, thus pushing the spot price higher.

Technical levels to watch

BTCUSD has bounced from its two-year low of 15,480 but risks remain tilted to the downside as the severity of FTX’s collapse and its accompanying impact on the broader crypto market is still uncertain. Nevertheless, some investors seem to be finding the current levels as a good opportunity for some dip buying.

Should the broader downfall continue, the price could descend to test the 2022 low of 15,480. Even lower, the August 2020 resistance of 12,490 could prove to be the next barrier for the price.

On the flipside, bullish actions may encounter initial resistance at 17,200 before the recent peak of 21,470 comes under examination.

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