The crypto market saw losses across the board on Wednesday as Bitcoin (BTC) dipped below the USD 20,000 mark again and some analysts pointed to a risk of further downside.
As of 10:30 UTC on Wednesday, BTC stood at $20,123, down 4% in the past 24 hours and down 3% in the past week. At a time, Ethereum (ETH) was trading at $1,133, down 7% on the day and up almost 1% on the week.
Other popular altcoins including Binanceit is BNB, FTXit is FTT, and avalancheit is AVAX token all recorded 24-hour losses of between 7% and 8%.
Notably, Wednesday’s market selloff came as news emerged that a court in the British Virgin Islands ordered the crypto hedge fund to be liquidated. Capital of the Three Arrowswho has been for some time insolvency rumor.
Sky News said he learned that Teneo partners in the British Virgin Islands have been lined up to handle the fund’s insolvency. According to the report, it was unclear what the immediate financial implications would be for Three Arrows’ creditors.
Meanwhile, MicroStrategy took advantage from the currently low BTC price by adding another 480 BTC to its coffers.
A “slow week”, but more volatility could arise
write to a market update on Tuesday, analysts from Arcane Research said bitcoin had “a slow week,” with the coin underperforming altcoins such as ETH and BNB, and even the S&P 500 stock index over the past seven days.
Analysts say bitcoin’s underperformance is likely linked to the “ever-growing contagion effects” of Three Arrows Capital’s insolvency and the collapse of the Earth (LUNA) ecosystem. This has further placed centralized crypto lending and borrowing companies in a difficult position, as seen with Celsius (CEL) and the freeze on withdrawals which he presented on June 13.
“The market is paying close attention to how the current imbalances are resolved, putting a tight leash on BTC’s ability to see substantial recovery,” the analysts wrote.
Finally, the market update also highlighted the current situation implied volatility (IV) in the bitcoin options market as a sign that traders are “always prepared for another spike in volatility.” This is remarkable given that bitcoin last week remained relatively calm just above the $20,000 level, after seeing increased volatility the previous week.
Similar warnings were also given in the last report from the on-chain analytics company glass knot, who noted that “almost all macro indicators for Bitcoin, ranging from technical to on-chain, are at all-time lows.” He added that this “coincided with the formation of the bear market floor in previous cycles.”
Still, the firm argued that these indicators and models are likely to be “put to the test” given the current macroeconomic environment.
“With so many flashing ground formation signals, the question is whether this time around will be any different,” the company asked in the report, without providing a definitive perspective on the answer.
Next week to be more “decisive”
Meanwhile, Joe DiPasquale, CEO of the crypto fund manager Capital BitBullwarned in an emailed comment that while it’s “a good sign” bitcoin held around the $20,000 level, it struggled to build momentum above that level .
DiPasquale explained that next week will likely be “more decisive” and said a successful test of support at recent lows, or a breakdown below that level, are the two scenarios that could occur.
However, he added that “at this stage, the chances of passing a new test seem higher”.
$12,500-$13,000 “excellent” for purchase
Commenting on the current bitcoin market situation from a technical analysis perspective, Mark Newton, Technical Strategist at Fundstrat Global Advisorssaid in a private note cited by Bloomberg that the risk of further declines has increased.
“Most near-term technical data points to an above-average probability of a final ‘washout’ type decline before this low,” Newton wrote.
“The initial warning should occur on a daily close under [USD] 20,491, while under [USD] 19,744 allows withdrawal to retest [USD] 17,592,” the strategist said, noting that, technically, “there’s not much under [USD] 17,592 before [USD] 12,500 to [USD] 13,000, which I think should be a great place for mid-term buyers to add to purchases. »
He concluded that,
“Any decline to test or briefly undermine the June lows presents an opportunity [to buy].”
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Learn more:
– Mike Novogratz now admits Terra’s model wasn’t sustainable
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– Small exchanges could plummet due to confusing ‘network of relationships’, report warns
– Bitcoin lifeboat, long road to recovery and exaggerated BTC deaths: Saylor, CZ and the professor weigh in
– Nexo eyes potential M&A targets as crypto market in ‘state of fear’
– Don’t Fear the Reaper: Why the Market’s Downtrend is Good for Crypto
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(Updated at 12:42 UTC with an announcement from MicroStrategy.)