why are crypto prices falling

Bitcoin sinks under $16K as FTX insolvency fears turn into contagion

BTC and altcoins continue to sell off, hitting new yearly lows as the collapse of FTX begins to drastically impact investors across the entire crypto market.

Crypto markets crumbled for a second day as the fallout from FTX’s liquidity troubles continued to negatively impact investor sentiment.

Throughout the day Bitcoin (BTC) price dropped, falling to a new yearly below $16,000 as Binance announced that it would back out of its agreement to acquire FTX. Investors had pinned their hopes on a rather swift market rebound if Binance was successfully able to acquire FTX, but now that the deal is scuppered, BTC and altcoin prices has sold-off further.

*Crypto market performance. Source: Coin360*

Another factor having a potential impact on the market is a wave of successive liquidations in Solana’s decentralized finance markets. Earlier in the day, cryptocurrency exchange Crypto.com emailed its users to inform them that all Solana-based USD Coin (USDC) deposits had been suspended.

A notice on the Crypto.com website also said:

“Please be informed that we have suspended deposits and withdrawals of the USDC and USDCT on the Solana Blockchain in the Crypto.com App and Exchange.”

At the time of writing, the price of Solana’s native SOL (SOL) coin is down 34%, trading at $16.10. FTX’s native FTX Token (FTT) is also 32% down on the day and trades for $3.78.

Data from Coinglass shows $832 million in total liquidations over the past 24 hours, and many traders expect the figure to increase.

*Total daily crypto market liquidations. Source: Coinglass*

For further backstory on what is happening with FTX, click here to watch Cointelegraph Markets’ explainer on the situation.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin analysts and traders say BTC’s low volatility is ‘a calm before the storm’

Stock markets slide toward yearly lows while Bitcoin price remains range-bound. Here’s why crypto analysts expect a sharp move from BTC soon.

If you were to hang around crypto traders this week, you would hear three phrases repeatedly muttered: “volatility,” “bond prices” and the potential of a “sharp move” in Bitcoin BTC price.

Multiple analysts have placed emphasis on Bitcoin’s range-bound price action, leading some to question whether this is a sign of a market bottom, or even a decoupling from equities markets.

In its latest “The Week On-chain” newsletter,titled “A Calm Before The Storm,” Glassnode analysts said:

“Recent weeks have seen an uncharacteristically low degree of volatility in Bitcoin prices, in stark contrast to equity, credit, and forex markets, where central bank rate hikes, inflation, and a strong US dollar continue to wreak havoc.”

Research outlet Delphi Digital also chimed in on the subject, pinpointing the Bollinger Band Width Percentile (BBWP) metric as proof that there could be “a big move brewing for BTC.” According to Delphi Digital, “Historically, BBWP readings above 90 or below 5 have marked major swing points.”

*BTC price and Bollinger Band Width Percentile. Source: Delphi Digital*

The BBWP has yet to dip under 5, but the researchers noted that for Bitcoin:

“Since Q2 2017, BBWP readings above 90 or below 5 have previously led to an upside of 204% or a downside of -51% on average.”

While it’s too early to conclude that BTC has broken its correlation with equities markets or even reached a market bottom, historical data suggests that long bouts of sideways price action have marked accumulation and distribution phases.

Glassnode’s Accumulation Trend Score, a metric that “reflects the aggregated balance change intensity of active investors over the past 30 days,” is currently in a neutral zone which denotes a state of equilibrium in Bitcoin’s accumulation structure.

*BTC Accumulation Trend Score. Source: Glassnode*

The report details how from 2018 to 2019, entities with 1,000 BTC to 10,000 BTC tended to distribute their tokens as the bull market quickened its pace, whereas retail investors (less than 1 BTC) increased their Bitcoin allocation.

*BTC accumulation trend score by cohort. Source: Glassnode*

Similar investor behavior can be observed in 2022 when entities with more than 10,000 BTC sold into the bear market rally to $24,500 before switching into an accumulation mode at the next price low.

As shown in the chart below, larger-balance BTC holders (greater than 10,000 BTC) are now neutral, whereas the 1,000 to 10,000 BTC cohort is accumulating. Meanwhile, retail investors show varying degrees of equilibrium and selling.

Where’s the volatility?

Bitcoin price has been trading in the $18,500–$24,500 range for the past 120 days, and as mentioned by Cointelegraph on Oct. 11, multiple factors could be responsible for the lack of fireworks.

A number of important economic events are set to take place in the next two weeks, and these could be contributing to traders’ desire to sit on their hands and watch from the sidelines.

The following events are set to occur in October:

Oct. 12: Federal Open Market Committee (FOMC) minutes
Oct. 12: Consumer Price Index (CPI) report
Oct. 17: Q3 earnings season begins
Oct. 28: Personal Consumption Expenditures (PCE) price index

Aside from a slight rebound in the Dow and S&P 500, equities markets continue to trend down, and an uptick in the conflict between Russia and Ukraine, plus the strength of the United States dollar, could also be contributing to investors’ aversion to risk assets.

By analyzing coin distribution across long-term and short-term holders, Glassnode concluded that sellers are likely exhausted and that more than 31% of the coins held by long-term holders are being held at a loss. Compared with previous market conditions, the researchers noted that:

“The market has been in this phase for 1.5 months, with a previous cycle duration ranging from 6 to 10 months.”

While it is impossible to predict which direction Bitcoin price will take once volatility spikes, studying on-chain data to decipher the actions of market participants in near-identical market conditions could assist investors in deciding what to do once the price does start moving.

Bitcoin price finally made a move, and fireworks are sure to follow

New crypto market trends are starting to emerge now that Bitcoin and equities markets move closer to make-or-break levels, which will determine the markets’ direction.

This week, Bitcoin (BTC) raised investors’ hopes and then left them high and dry again.

Traders placed a majority of their attention on BTC price pushing through a long-term descending trendline resistance, but according to Cointelegraph analyst Ray Salmond, “BTC price simply ‘consolidated’ its way through the trendline by trading in a sideways manner where price has been range bound between $18,500 and $24,500 for the past 114 days.”

At the time of writing, BTC’s price continues to battle at $20,000, and it’s uncertain whether or not the level will hold as support.

Data from on-chain analytics firm Whalemap shows the three price zones investors should focus on.

*Key BTC price support zones. Source: Whalemap*

Whalemap told Cointelegraph, “So far, the resistance at $20,380 — that is due to a whale accumulation of ~20,200 BTC — has been working quite well, with the latest rejection being almost to the dollar accurate.”

Whalemap elaborated:

“Our support remains unchanged since the drop from $30,000. It lies at $19,174 and was formed all the way back on June 18, 2022, by a staggering accumulation of ~101,300 BTC by whale wallets. There is also one more resistance above $20,380, at $21,543. But first, we need to at least break above $20,380.”

From the perspective of technical analysis, on the daily timeframe, the Bollinger Bands are constricted, BTC futures open interest reached a near-record high above 604,000, and the price is trading outside of a long-term trendline resistance — all of which are signs that a directional move is in the making.

As shown by the chart below, investors’ appetite for risk continues to decline, and it should be no surprise that risk assets are the first to see outflow and be ignored by investors during a bear market.

*Investor risk appetite. Source: Bank of America Global Research*

While BTC’s and Ether’s (ETH) prices have ignored the recent volatility seen in equities markets, United States Federal Reserve policy and the potential for another wave of strong selling in stock markets could trigger the next leg down for the cryptocurrency market.

What’s next for Bitcoin?

At the moment, Bitcoin and the wider crypto market are essentially in a zone where a range of bullish and bearish factors could determine the next direction of the trend.

As mentioned by Delphi Digital, Bitcoin is currently following the trajectory of previous market cycles.

*2018 Bitcoin market cycle vs. 2020 Bitcoin market cycle. Source: Delphi Digital*

Zooming in closer, we can see what Delphi Digital characterizes to be “uncanny similarities to the 2018 cycle.”

*2018 Bitcoin market cycle vs. 2022 Bitcoin market cycle. Source: Delphi Digital*

There are a handful of Bitcoin, crypto market and equities metrics that are showing confluence and support the possibility of a relief rally in the short term, but generally, the overall trend favors the downside. If equities see some relief and rally higher, the tight correlation between BTC, Ether and equities markets would suggest a similar style of price action in crypto.

With that said, a Bitcoin relief rally is likely to be capped at $27,500, where the 200-day moving average resides. The most encouraging short-term actions from Bitcoin would be to either continue in the same range, holding $20,000 and $18,400 as support, or a high volume breakout clearing the current 116-day range with a series of daily closes above the range high at $25,200.

An eventual flip of the 200-MA to support and a series of weekly higher highs on the candlestick chart would be early signs of a possible longer-term bullish reversal, but this seems highly unlikely given the macro headwinds facing Bitcoin.

This newsletter was written by Big Smokey, the author of The Humble Pontificator Substack and resident newsletter author at Cointelegraph. Each Friday, Big Smokey will write market insights, trending how-tos, analyses and early-bird research on potential emerging trends within the crypto market.

Will bulls take charge now that Bitcoin price trades above a long-term trendline resistance?

Bitcoin bulls celebrated BTC’s push through a long-term trendline resistance, but has anything actually changed?

On Oct. 4 and 5, Bitcoin (BTC) took another step through the $20,000 mark, bringing the price above a long-term descending trendline that stretches all the way back to April 22 or Nov. 15, depending on one’s style of technical analysis.

Some traders might be feeling a bit celebratory now that the price trades outside of the descending trendline, but have any relevant metrics or macro factors changed enough to support a bullish point of view for Bitcoin price?

In reality, BTC price simply “consolidated” its way through the trendline by trading in a sideways manner where price has been range bound between $18,500 and $24,500 for the past 114 days.

Direction-wise, Bitcoin and Ether (ETH) tend to trade in tandem with equities, and BTC’s Oct. 4 rally to $20,365 comes as the Dow, S&P 500 and Nasdaq closed the day with 2% to 3% gains.

*BTC, ETH and S&P 500 correlations. Source: Coin Metrics*

As a reminder that short-term price action is not necessarily reflective of a larger trend change, Coin Metrics said:

“Correlations among BTC, ETH and with the S&P 500 have increased recently as the benchmark index fell in price to 3600, which had not been breached since December of 2020.”

Despite the Oct. 4 “all-in rally” in stocks and crypto markets, larger fears of global runaway inflation, rising interest rates and other economic concerns continue to suppress investors’ appetite for interacting with markets, a fact that is clearly reflected in Q3 results.

*Q3 2022 asset performance. Source: Coin Metrics*

On Oct. 5, OPEC announced plans to cut oil production by 2 million barrels per day, which is roughly equivalent to 2% of the global oil demand. Oil stocks rallied at the announcement, but the White House is likely concerned that the reductions will complicate the Federal Reserve’s fight against inflation and possibly contribute to higher petrol prices.

Generally, institutional investors like Citi and Goldman Sachs expect volatility in equities markets to continue, and both have revised down their end-of-year targets for the S&P 500, while investors are still predicting a down year in 2023.

All said, inflation remains high across the globe, corporate earnings expectations are being adjusted to the downside, and the Fed appears confidently resolute in its current plans for reducing inflation.

None of these developments are conducive to boosting investors’ risk sentiment, and given Bitcoin’s correlation with equities markets and sensitivity to bearish economic news flow, it seems unlikely that BTC breaking through the descending trendline is a sign of a trend change.

A more convincing development would be a range-break and a series of daily closes above $25,000.