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Analysts point to overleveraged traders after Bitcoin flash crashes to $43K

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Analysts point to overleveraged traders after Bitcoin flash crashes to $43K

Traders were caught flat-footed on Sept. 7 after a sharp collapse in the price of Bitcoin (BTC) saw the digital asset fall below $43,000, and this led to widespread liquidations in derivative markets as more than $3.54 billion was liquidated. 

Amount of Liquidations in the past 24 hours by exchanges in total $3.54 was liquidated!

In the past 24 hours, 330,243 traders were liquidated. The largest single liquidation order happened on @HuobiGlobal #BTC $BTC value $43.7M

Data source: @bybt_com pic.twitter.com/hNgctWgCgP

— CryptoDiffer (@CryptoDiffer) September 7, 2021

Bullish sentiment had been on the rise coming out of the Labor Day holiday weekend in the United States because Bitcoin was officially recognized as legal tender in El Salvador, but the celebration was quickly extinguished by BTC’s 16% plunge.

Data from Cointelegraph Markets Pro and TradingView shows that the sell-off in BTC began during the early trading hours and accelerated into midday as the price of Bitcoin fell to a low of $42,837 before dip buyers arrived to bid it back above $46,500.

BTC/USDT 4-hour chart. Source: TradingView

Here’s what traders are saying about this rapid sell-off and what to be on the lookout for as the market attempts to digest the chaos of the day.

Longs are heavily liquidated as BTC sells off

A fact-focused analysis of the current state of the market was offered by on-chain analyst Willy Woo, who posted the following tweet outlining Sept. 7’s developments.

Day opened with equities risk-off.

Some sell down of BTC.

Medium levels of fundamental inflows (selling).

Then stop hunt / liquidity collapse.

$1.1b of BTC liquidations.

Overall unsupported by investor fundamentals on-chain.

Exchanges are now in outflows (buying)

— Willy Woo (@woonomic) September 7, 2021

As noted by Woo, the wider financial markets opened the day risk-off, which put pressure on the crypto market that cascaded as the day progressed.

The ensuing sell-off resulted in $1.1 billion worth of Bitcoin liquidations, but on-chain data does not suggest that investors are in a rush to close their positions, and the most recent activity shows that exchanges are back in buying mode.

A follow-up tweet from Woo shows just how unexpected Sept. 7’s move in the market was, a good reminder that risk management is always something to keep in mind in the crypto market.

Woo said:

“Not entirely sure WTF just happened, but that’s the sequence of events. The sell-off was mainly on derivative markets (like most crashes).”

Possible outlier detected

Further analysis of Sept. 7’s move in Bitcoin was provided by market analyst and Cointelegraph contributor Michaël van de Poppe, who also highlighted the role that overleveraged traders played in the day’s price action.

#Bitcoin lost that $49K level as crucial support and smacked through it.

What just happened?

Overleveraged positions getting liquidated in a chain reaction, causing a massive wick.

If this wick closes above $47/48K, it will be an outlier.

Opportunities.

— Michaël van de Poppe (@CryptoMichNL) September 7, 2021

According to Poppe, if BTC can manage to close above the $47,000–$48,000 range following this pullback, the move will be considered an outlier to the previously established trend and a good buying opportunity, should the uptrend resume.

Related: El Salvador buys the dip as Bitcoin price flash crashes to $42.9K

Not all traders were caught off guard

Not all participants in the market were caught unaware by Sept. 7’s downside move, as highlighted in the following tweet posted by analyst and pseudonymous Twitter user Crypto_Ed_NL.

Feeling lucky you did not get liquidated in that corrective move earlier today?
Wait with getting new, dry pants…might not be over yet! pic.twitter.com/DIp9USNfK7

— Crypto_Ed_NL (@Crypto_Ed_NL) September 7, 2021

A follow-up tweet included the following chart showing that the scenario played out just as Crypto_Ed_NL had warned.

BTC/USDT 15-minute chart. Source: Twitter

Crypto_Ed_NL said:

“BTC reached the green box. Let’s see how it bounces….. Should be it for this correction in my opinion.”

The overall cryptocurrency market capitalization now stands at $2.103 trillion, and Bitcoin’s dominance rate is 42.1%.

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.

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BTC, ETH, XRP, ZEN, UNI, OMG, AXS — Technical Analysis Sept 28

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BTC, ETH, XRP, ZEN, UNI, OMG, AXS — Technical Analysis Sept 28

Bitcoin (BTC) was rejected by the $44,000 horizontal resistance area.

Ethereum (ETH) is following a descending resistance line and potentially trading inside a descending wedge.

XRP (XRP) is following a descending support line.

Horizen (ZEN) has broken down from an ascending support line.

Uniswap (UNI) has broken out from a descending wedge.

OMG Network (OMG) is following an ascending support line.

Axie Infinity (AXS) has broken out from a descending resistance line.

BTC

On Sept 27, BTC was rejected by the $44,000 resistance area and created a long upper wick (red icon). This is a bearish sign since the area had previously been acting as support, and the rejection now validates it as resistance.

Technical indicators in the daily time frame are bearish. Both the RSI and MACD are decreasing. The former is negative while the latter has just fallen below 50.

The next closest support area is found at $38,000.

ETH

ETH has been decreasing underneath a descending resistance line since Sept 3. Most recently, it was rejected by the line on Sept 16.

Due to the long lower wicks, the support line cannot be accurately determined. However, it’s possible that ETH is trading inside a descending wedge.

Despite the wedge normally being considered a bullish pattern, technical indicators are neutral. The RSI is right at the 50-line and the MACD is below 0, although it is increasing.

Therefore, the direction of the trend cannot be accurately determined at the current time.

XRP

XRP has been following a descending support line since Aug 17. So far, it has been validated multiple times, most recently on Sept 21. The final touch of the support line (green icon) also coincided with the 0.618 Fib retracement support level at $0.85.

Despite the fact that XRP is trading above a confluence of support levels, technical indicators are not bullish. The RSI is at the 50-line and the MACD is negative, even though it is moving upwards.

The closest support and resistance levels are found at $0.76 and $1.07 respectively.

ZEN

ZEN has been decreasing since Sept 15, after creating a double top pattern and a long upper wick. The pattern was also combined with a bearish divergence in the RSI.

Shortly after, it broke down from an ascending support line. The breakdown is supported by the MACD and RSI, which are both decreasing.

The closest support area is found at $53.

UNI

UNI has been decreasing since Sept 2. After the Sept 7 drop, it created a descending wedge, which led to a low of $17.73 on Sept 26.

However, UNI rebounded and broke out from the wedge. The breakout is supported by the increasing MACD and RSI.

The closest resistance area is found at $26.15, created by the 0.618 Fib retracement resistance levels.

If UNI is successful in moving above it, it may move toward new highs.

OMG

OMG has been following an ascending support line since July 20. However, since Sept 6, it has failed to break out above the $10.60 area, which is the 0.618 Fib retracement resistance level.

Despite the rejection, technical indicators are bullish. The RSI has generated a hidden bullish divergence and the MACD is positive.

Therefore, an eventual breakout would be likely. This could take OMG toward the $15.33 all-time high price.

AXS

AXS has been increasing since Sept 21 when it bounced at the $48.28 support area. The next day, it created a bullish engulfing candlestick and broke out from a descending resistance line.

Following this, it reclaimed the $63 horizontal area and validated it as support.

Both the MACD and RSI are increasing, supporting the continuation of the upward movement.

The next resistance area is found at the all-time highs of $94.50.

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Bitcoin (BTC) Fails to Move Above $44,000 Resistance

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Bitcoin (BTC) Fails to Move Above $44,000 Resistance

Bitcoin (BTC) attempted to move upwards on Sept 27 but was rejected by the $44,000 resistance area.

While BTC is still trading inside the upper portion of a descending parallel channel, the price action is lacking bullish signals.

BTC gets rejected

On Sept 27, BTC made an attempt at moving above the $44,000 area but was promptly rejected (red icon). The area had acted as support in August and the beginning of September but turned to resistance after the breakdown on Sept 20. The rejection created an upper wick and a bearish candlestick. 

Besides trading below resistance, technical indicators for BTC have turned bearish as both the RSI and MACD are decreasing. The MACD has just crossed into negative territory while the RSI is below 50. 

If BTC were to continue moving downwards, the next closest support area would be found at $38,000.

Current channel

The six-hour chart shows a descending parallel channel, which usually contains corrective structures.

Currently, BTC is trading inside its upper portion. Furthermore, it’s trading just above the 0.5 Fib retracement support level.  

Despite being above a confluence of support levels, technical indicators are bearish/undecided. The MACD is negative and has lost its strength while the RSI has just fallen below 50.

The two-hour chart shows that BTC is following an ascending support line and has made three higher lows since Sept 21. While this can be seen as a bullish structure, the price action is not bullish. 

The previous resistance area at $43,000 that was expected to act as support did not. On the contrary, BTC fell right through it. Furthermore, both the MACD and RSI have turned bearish.

While there is very strong support at $41,500, created by the 0.786 Fib retracement support level and the ascending support line, the price action does not seem bullish.

Wave count

The most likely wave count still indicates that the decrease from Sept 7 to Sept 21 was part of an A-B-C corrective structure, in which waves A:C had an exact 1:1 ratio. This is also supported by the presence of the descending parallel channel.

However, the movement since the low does not seem impulsive, casting some doubt on the possibility of this being the correct count.

Alternative counts could see the movement as a flat A-B-C corrective structure (upper image), or in the more bearish case a 1/2-/1-2 wave structure (lower image). 

At the current time, the correct count cannot be determined.

For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Europe becomes largest crypto economy with over $1T in transactions — Chainalysis

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Europe becomes largest crypto economy with over $1T in transactions — Chainalysis

DeFi has become a major catalyst for Europe’s crypto economy. Large institutions have also upped their share of transactions significantly.

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Europe becomes largest crypto economy with over T in transactions — Chainalysis

The region of central, northern and western Europe, or CNWE, has emerged as the world’s most active cryptocurrency block, receiving over $1 trillion worth of digital assets over the past year, according to new research from blockchain analytics firm Chainalysis. 

The report, which was released Tuesday, found that the CNWE region accounted for 25% of global crypto activity between July 2020 and June 2021. The region witnessed a sharp uptick in transaction volume across all crypto sub-categories, especially decentralized finance, or DeFi.

Chainalysis describes crypto transactions as anything involving trade, investments and business dealings.

Europe has also become a hotbed for institutional investing, with transactions values in this category growing to $46.3 billion in June 2021 compared with just $1.4 billion in July 2020. Perhaps surprisingly, the United Kingdom is the single largest crypto economy in the region at $170 billion worth of transactions. Nearly half, or 49%, of the value was sent via DeFi protocols.

“The U.K.’s growth is driven mostly by growing institutional investment, based on the large-sized transfers driving most of its transaction volume,” Chainalysis senior content marketing manager Henry Updegrave told Cointelegraph. 

A secular bull market for Bitcoin (BTC), the growth of competing smart contract platforms and the arrival of decentralized finance all contributed to crypto’s massive rally during the study period. It comes as no surprise that CNWE’s crypto market activity peaked in May 2021 during the height of the bull market, which was one month removed from Bitcoin hitting $64,000.

Chainalysis’ data corroborates a growing body of evidence showing that large institutional investors have become a driving force within crypto. Wealth managers, family offices and other institutional players have poured billions of dollars into Bitcoin and Ether (ETH) investment products offered by Grayscale, CoinShares, 21Shares and others.

Related: Crypto asset manager Cobo raises $40M to launch DeFi-as-a-service

Beyond the advanced economies of Europe, Chainalysis research has documented the growing uptake of crypto in emerging markets. The Chainalylsis 2021 Global Crypto Adoption Index named Vietnam, India and Pakistan as the leading countries for adoption based on on-chain value received, retail transactions and peer-to-peer exchange trade volume.

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