Supporters of technical analysis should be wary – on Wednesday afternoon, bitcoin broke through the neck line of an imaginary reversal figure of technical analysis “head-shoulders”, coinciding with the psychological level of $ 60,000. A U-turn? Is the growing trend broken? It is better not to rush to conclusions. The fundamental picture has not changed in recent days, the factors in favor of growth remain in force (inflation is gaining strength, a hedge is needed). You can expect that the “bears” who played for the breakdown will eventually be trapped. Those who were knocked out of positions will eventually be forced to enter at higher levels, which will give dynamism to the growing momentum.
The current move down to the lows since October 15 is not due to the pressure of hedge funds that opened short on CME-traded futures, which are used by operators of SEC-approved exchange-traded funds based on the first cryptocurrency. They can do arbitrage, counting on the collapse of the difference with the price of futures, which, due to the hype around the ETF, has reached record values. The current downturn is the effect of leverage. Cryptoquant warned that traders have gained maximum leverage since the beginning of the year, and whales, of course, are happy to “help” the market “unload” from long positions. According to Bybt, the volume of liquidations of longs on cryptocurrencies over the past day has reached $718 million, the maximum since September 20.
You shouldn’t worry. Holders have only just started to take profits and these are just spot steps
Glassnode has so far even refused to call it a trend with confidence. The third largest wallet, for example, continues to accumulate. Exchange balances have been updated at least since January 2018 (2.44 million BTC), the stock of stablecoins (“raw materials” that can be converted at any time) remains high.
There is significant news indicating further recognition of cryptocurrencies. The Federal Deposit Insurance Corporation and Mastercard (NYSE:MA) (the first in regulatory terms, the second in technical terms) are working on banks’ access to cryptocurrencies (primarily to stablecoins). Stable coins are liquidity for DeFi. This is the further development of the industry. Fitch stressed that the launch of bitcoin futures ETFs will cause an influx of retail players into the space. Yesterday, two more applications were added to the SEC for consideration (one with a shoulder of 1.25x, the second for short). But the spot bitcoin ETF is not “shining” on the market yet. In Arcane Research, low chances are associated with the preservation of a large discount in the Grayscale Investments bitcoin trust (which should tend to zero against the background of the company’s application for its conversion into an ETF). We can also recall the recent collapse of bitcoin on Binance.US and Kraken, as well as a number of small platforms – SEC do not trust cryptocurrency exchanges due to manipulation.