The cryptocurrency market continues to bleed as investors anticipate a steeper correction sell their holdings quickly.
The central theses
- Around $23 billion worth of assets have been wiped out of the cryptocurrency industry in the last 24 hours.
- The top two crypto assets, and , both dropped in double digits as selling pressure mounted.
- Now the market appears to be in danger of entering a sustained downtrend.
Panic has hit the cryptocurrency market as Bitcoin and bitcoin haunted Ethereum enter free fall. Although the correction appears to have stopped, investors are still selling off their holdings en masse.
Fear and desperation echoes across the crypto market
According to data from Glassnode, the total number of bitcoins held on popular cryptocurrency exchange addresses has increased by nearly 2.77% over the past week. More than 67,712 bitcoin has flowed into multiple trading platforms, coinciding with a spike in volatility.
Increased inflows into exchanges are generally viewed as a bearish indicator as market participants typically go through exchanges to sell their holdings. Currently, many crypto holders appear to be preparing to sell their holdings in anticipation of a steeper correction.
Bitcoin – balances on exchanges.
Source: GlassnodeSentiment in the crypto market turned after Bitcoin broke a historically rising trend line seen on its weekly chart. The event led to a 12.67% downturn that saw Bitcoin hit a low of $29,740.
The latest drop marks the third time since March 2013 that the top cryptocurrency has broken crucial demand levels. The first time Bitcoin broke below the level was in August 2015, which resulted in a 37.67% correction that marked the end of the bear market. Similarly, Bitcoin plunged 43.32% after it broke the support trendline in March 2020.
IntoTheBlock’s IOMAP transaction history suggests that the bearish outlook may materialize. Bitcoin is currently trading on a thin support layer around $31,000 and it is facing a strong resistance. Around 668,000 addresses bought nearly 376,000 Bitcoin between $34,246 and $35,190.
The same addresses may seek to exit their positions to try to rebalance their investments in the event of an upside impulse, which could mean rejecting any upleg. Based on the on-chain data, Bitcoin likely needs to print a weekly close above $35,190 for any chance of invalidating the bearish thesis. If successful, it could march towards $40,000.
The increase in selling pressure across the crypto market can also be seen from the on-chain perspective of Ethereum holder. Glassnode data shows that the number of addresses contains more than 1,000 Ethereum is down 0.83% over the past week. More than 50 whales have sold or redistributed over $2.5 million worth of Ethereum each within the short term.
Ethereum – number of addresses with more than 1,000 balances.
The increasing downward pressure and lack of buying interest has prompted a 13% correction in Ethereum’s market value, taking it to a low of $2,200 in the last 24 hours. The sudden downturn allows Ethereum to break out of a symmetrical triangle in a negative stance.
The height of the Y-axis of the triangle indicates that Ethereum is primed for a 64% correction. A sustained weekly candle close below $2,600 could confirm the bearish outlook and potentially lead to a downtrend to $900.
Source: TradingView According to IntoTheBlock’s IOMAP model, it looks like Ethereum’s main supply wall is around $2,450, where over 652,000 addresses have bought more than 13.71 million Ethereum. Any further signs of weakness could prompt these names to exit their positions to avoid significant losses, accelerating the downward pressure.
To refute the bearish thesis, Ethereum would likely need to rally to $3,270 and a weekly one candlestick print just above.
Source: IntoTheBlockUntil bitcoin recovers $35,190 as support and Ethereum rises above $3,270, the crypto market will likely look shaky. Alongside the top two crypto assets, many other coins are trading with weak support. That could mean they suffer steeper corrections than the more established cryptocurrencies.
The last 24 hours has been something of a bloodbath across the market. Terra’s LUNA has fallen more than 60% as UST lost its peg to the dollar. Bored Ape Yacht Club’s ApeCoin also fell as low as 33%, while STEPN’s GMT briefly plunged more than 40%.
Source: Crypto News Deutsch