Now that we have closed below $40k, what next?
As I write this post, BTC is down 5.5% for the day and is undergoing what looks like a freefall. Volumes are abysmally low, so not everyone is selling lock, stock, and barrel.
First, I will leave a few charts here before I comment on what I expect.
As expected, trading volumes have gone up marginally. These aren't stop-losses being hit, but just people panicking and selling in general, or a marginal increase in shorts.
Nothing to report here, just a cautious market waiting and watching.
Funding rates have fallen sharply making it more expensive to initiate shorts here. Short interest has gone up for sure, though.
Yesterday was a complete risk-off day.
Futures ๐
Brent crude ๐
Gold ๐ (kind of relatively flat)
Rates ๐
BTC's price action from yesterday completely mimics the price action of S&P futures. BTC was at 43.5k at one point in time, yesterday. S&P futures are down again today, but that could also be because of the weekend. Equity futures are oversold based on RSI and have reached the critical level of 200 DMA, which should have a high probability to hold as support. Risk-on should be back next week. But what about Bitcoin, a market that trades 24x7? I only see two scenarios - 1) High probability that BTC becomes range-bound during the weekend with low volume 2) Low probability that BTC crashes significantly further from today's lows.
50% crash from ATHs brings BTC to $34.5k. That (+- $500) could be a level to initiate some longs.
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