- Jul 31, 2021
January 11 of 2019 witnessed an intense sell-off in the crypto market when the Bitcoin price dropped below the $3,600 mark and major digital assets recorded drops in the range of 10 to 15 percent. With the BTC price decline from $4,036 to $3,503, traders expect the dominant cryptocurrency to fall below key support levels, possibly below $3,300.
Preceding the Christmas Eve of 2018, there was a demonstration of a renewed optimism toward a short-term trend reversal of Bitcoin and other major cryptocurrencies by quite some investors in the cryptocurrency market. This was major because of the strong recovery of BTC from its 12-month low at $3,122, when within a three-day span, December 17-20, the Bitcoin price increased from $3,181 to $4,172, by more than 31 percent. It is thought that the short-term rally Bitcoin experienced from December 17 to 20 was essentially a corrective rally triggered by oversold conditions.
Su Zhu, an FX hedge fund CEO, had mentioned the boost of buying walls on leading fiat-to-crypto exchanges including Coinbase and Bitstamp in the range of $3,200-$3,300, following which investors began accumulating the asset at a low price range.
10% down from here ($3,300), buy walls on @Coinbase are now the largest (in BTC notional ) since mid-2015. Similar for Bitstamp. To break lower will require filling these fiat-backed bids. Either 1) more BTC borrow to come online 2) KYC-able off-ramp selling. Derivatives selling will just lead to funding becoming very negative as it has been. – Su Zhu, an FX hedge fund CEO
Given the lack of momentum of the asset throughout late December and early January, it was reasonably evident that the probability of a proper short-term rally was low.
DonAlt, a cryptocurrency investor and technical analyst, is of the opinion that after BTC fell below $3,600, it can be fairly expected that there would be a drop to $3,350 as a support level at $3,600 was cleanly breached: “Clean break of support. If we do retest $3,700 on the weekend and don’t manage to close above there I’m expecting $3,350. I’ll most likely close my hedge short there. This is the reason why you shouldn’t trust mismatched patterns – it’s an easy way to get rekt.”
Along with the drop in Bitcoin by more than 10 percent in a 48-hour period, other major cryptocurrencies like Ethereum, Bitcoin Cash and the like recorded 15 percent falls against the U.S. dollar. Furthermore, Ethereum was expected to maintain a positive upward price movement in anticipation of its Constantinople hard fork on January 14 but was ultimately outdone by Ripple.
Even though the daily volume of Bitcoin and Ethereum still remain relatively high, the volume of the cryptocurrency market, since January 10, is lingering at $15 billion, down $7 billion. On that note, a short-term drop should be expected in the scenario of crypto assets continuing to plummet without meaningful volume and strong sell pressure.