10.05.2022 – Sell-off on the stock market, slaughter on Bitcoin. And not only here – in the entire crypto market assets were liquidated in recent days. But now the countermovement is underway – an extremely important chart mark has been defended for now. We shed light on the background.
A feast for traders: In the past few days, Bitcoin and co. have been going strong. BTC has just dipped to its low for the year. Most recently, however, the bulls had the reins in their hands again. The support at around $30,000 was and is important – this is the low from July 2021. Moreover, such large round marks are always seen as decisive milestones anyway. In the four-hour chart, you can also see a price gap – which will probably be closed at some point.
But let’s take a look at the background to find out what might happen next. One factor in the recent bear market was, of course, the downward slide on Wall Street. Most recently, it was risk off – everyone silvered what they could.
Everything must go
The sell-off extended to all cyber currencies, as “CoinMarketCap” reported – even the exotic orchids like Solana, Terra Luna, Cardano, Shiba Inu saw their garden thinned vigorously with losses of up to a fifth. According to “CoinGlass”, some $725 million in assets were liquidated across the crypto market in the 24 hours ending yesterday, May 09.
Philip Gradwell, chief economist at “Chainalysis” pointed out an interesting fact in the BTC market: according to this, large amounts of assets from retail investors flowed into the crypto exchanges: ”Private wallets are now accounting for 40% of exchange bitcoin inflows rather than the typical 10%, which means there is a lot of extra sell pressure – and it is a similar story for ETH…”.
Big buyer may have to liquidate
BitcoinMagazine discovered another bearish factor: because of the recent wave of selling, one of the biggest BTC buyers may now become a seller. The nonprofit organization Luna Foundation Guard (LFG) in Singapore had accumulated 42,530 Bitcoin at a price of $30,000 and would probably have to liquidate them. According to the report, the reserves will be used to support the price of Terra Stablecoin (UST).
Escape from Russia
Our conclusion: All of the above-mentioned arguments of the experts seem valid to us. But in addition, there is a special factor that is difficult to support with numbers and could last longer. We suspect that many Russians are currently leaving the country and building a new future in the West. We hear from thousands of IT professionals and well-educated young managers who are fed up with living in a neo-Stalinist regime that is burning its youth in a senseless fratricidal war, attracting sanctions from the West and thus endangering the middle class. Therefore, savings are being sold off, which are stored in cryptos by web-savvy investors. In short, the best are leaving. It was like that under the czars, the communists and again now.
Important US data
In the short term, the bulls remain hopeful that the countermovement will continue. Thus, the inflation data from the U.S. for April could at least temporarily become a “turning point” for Bitcoin, judged Yuya Hasegawa, crypto market analyst at Japanese broker Bitbank. Volatility will continue, in his opinion – Hasegawa expects a trading range between $30,000 and $38,000 this week. Bernstein Bank keeps an eye on the situation for you!
Important Notes on This Publication:
The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 83% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7