Bitcoin, Ethereum Rally Back After Breaking Crucial Levels, USD 225M Liquidated
On Monday, the most popular cryptocurrency, bitcoin (BTC), dropped below the USD 40,000 level for the first time since August 2021, while ethereum (ETH) dived below USD 3,000 for the first time since October. However, the dip was short-lived as both top cryptoassets rebounded sharply soon after.
BTC slipped below USD 39,700, before moving back above USD 41,700, while ETH tested USD 2,920 and rallied above the USD 3,075 level again.
At 16:30 UTC, BTC is almost unchanged in a day, while ETH lost 1.5% of its value.
As the selloff in the market accelerated, over USD 225m worth of crypto derivative positions were liquidated in the past four hours, or 69% of total liquidations in the past 24 hours, per Coinglass data.
Other major cryptoassets from the top 10 club are down up to 3% in a day.
“Despite the crypto market being in oversold territory, it is widely impacted by global markets and economic conditions. Plans declared by the Federal Reserve for rate hikes in 2022, as well as reducing the rate of monthly bond purchases, have contributed to bitcoin’s selloff so far,” Marcus Sotiriou, Analyst at the UK based digital asset broker GlobalBlock, wrote in an emailed note.
Meanwhile, on Wednesday, US inflation data will be released.
“The market expects the consumer price index (CPI) to rise 7.1% for the year through December and 0.4% over the month. If the figure released is larger than expected we can expect further sell pressure for bitcoin, as the markets are forward-looking and high inflation leads to more action from the Federal Reserve to control it,” Sotiriou said, adding that the downside is limited in the short term, even with higher-than-expected inflation data on Wednesday.
Nice bounce from orange coin. pic.twitter.com/wXP7b0TBBY— Dylan LeClair 🟠 (@DylanLeClair_) January 10, 2022
They gave us the 39k tap. Well, always be prepared for what you might deem less than likely. https://t.co/GYI1ZxEDoH— The Crypto Dog 📈 (@TheCryptoDog) January 10, 2022
Bitcoin is not a hedge against asset price moves (yet), but rather is an OPTION on its own acceptance as digital gold (or more).— Dave Weisberger (@daveweisberger1) January 10, 2022
As a result, it’s only a LONG TERM hedge against a loss of trust in governments now, with upside if one believes it will successfully become a SOV.
The long-term holder supply tracked by @glassnode is time-weighted, so this chart is telling us that LTHs are either buying the dip or selling less (so recent acquisitions mature into longer-term ones) or both. pic.twitter.com/J6WLnpzurV— Noelle Acheson (@NoelleInMadrid) January 10, 2022
From a PA perspective all conditions for a bottom are there. But this time highly likely need the macro to cooperate.— Alex Krüger (@krugermacro) January 10, 2022
Expect $BTC to remain highly correlated to $SPX over the short/medium term.— Dylan LeClair 🟠 (@DylanLeClair_) January 10, 2022
Liquidity trumps all, and whether the everything bubble is inflating or deflating, both equities and BTC will react accordingly.
All eyes on the Fed. pic.twitter.com/AyEQRNUS4D
– Bitcoin, Ethereum Could Benefit If Stocks Drop After Fed Tightening – Strategist
– Blame Fed and Leveraged Traders for This Crypto Seloff
– Bitcoin Could Reach USD 100K in Five Years If It Takes on Gold – Goldman Sachs
– USD 100K per Bitcoin ‘Hopium’ Now Moved to Mid-2022
(Updated at 15:10 UTC with the latest market data and reactions. Updated at 16:32 UTC with the latest market data and additional reactions.)