It is another red day for cryptos and there are fears that there could be more correction. However, today’s drop to $ 5,200 signals an opportunity to accumulate high value in cryptocurrencies that have the potential to skyrocket in price after current events pass.
All the forecasts are coming true around the Black Swan that is now coronavirus, so the massive sale of $ 2.25 trillion in Futures Contracts settled today after the BTC drop to $ 5,5542 is still the main indicator to follow as stated by leading analysts.
Among the longs that have been liquidated, the BitMex exchange had the highest number of future contracts sold in the flash crash with around $ 719.35 MM, followed by OKEx with $ 706 million and Huobi Global with $ 534 million according to the data displayed by Datamish.
Today’s drop in the price of Bitcoin in just 30 minutes represents a loss of $ 1,700 dollars and has so far been one of the biggest drop in the BTC market in recent times. At the same time, its recovery above the $ 6,000 mark fueled by high demand from bulls and opportunists to accumulate more BTC at low prices, also points to the high interest that many investors are showing in the face of the collapse of traditional markets.
Among the main causes that seem to have caused the abrupt drop was the news coming from the temporary closure of trade in CME Group due to the expansion of the coronavirus after it was declared a pandemic by the World Health Organization. In addition, today the New York Stock Exchange stopped again after excessive price falls in the main Wall Street indexes, which will undoubtedly have an important effect on the behavior of the price of Bitcoin for the rest. of week.
— CBS Los Angeles (@CBSLA) March 12, 2020
Bitcoin Current Situation
As we were able to observe last week, the price of Bitcoin fell to the $ 7,750 level, affirming the downward trend from the rejected level at $ 10,500. Bitcoin later had a maximum rebound to $ 8,300, and finally adjusted to $ 7,750 the previous week.
This support was achieved after the price rose to a resistance level of $ 9,250- $ 9,300 before bearish action began towards $ 7,750.
Now on the 1D chart we can see that the main support levels for BTC on the way down are $ 6,817 and $ 5,842 “both already temporarily broken”. The $ 5,842 level is aligned with the descending price channel support trend line, and therefore support should definitely be at this point.
In this chart the key resistance levels of EMA and SMA @ 1D are at $ 8,708 and this tells us that in the near future the price should not exceed this level.
The Klinger indicator for this chart shows that the massive sales will continue towards the support prices established as a target for speculators to accumulate more wealth, before a possible rebound towards the weekend in the blue zone of the 7k. The strategies for now are short on most BitMex positions, supporting the analysis.
On the 4H chart for the BTC \ USD pair, we can see that the SMAs are being used as resistance, with indicators currently pointing to a resumption in the market sales, noting that the bearish price action is still intact for the next few hours but with less fuel to burn down.
What to Expect from Bitcoin
We have already observed that the price of Bitcoin is generally affected by the fall of traditional markets due to the expansion of the coronavirus, basically for two reasons: the possible operational closure of mining farms and the loss of institutional money due to the operational closure of large markets.
Before yesterday’s event, the price of Bitcoin had managed to stay on the weekly chart above the trend line that supported the minimum prices around the $ 3,500 seen in February 2019 for the last time.
Despite how bad the situation is currently and the threat of breaking this support definitively, caution is the best recommendation for now in the crypto markets and not taking risky positions in times of uncertainty.
For traditional investors in the Bitcoin market, we have already seen these risks before and the cryptocurrency continues to demonstrate decline and recovery so far, generating rapid profit for those who go deep and wait for the rise.
The price of BTC is reacting negatively to the threats of a global recession due to the effects of the coronavirus in just over a month for its next halving and it remains to wait if the support area located in the purple rectangle will be reached again by BTC at the close of this week.
At press time, the price of Bitcoin is trading at an average of $ 6,125.52 with a double-digit contraction of -21.68% and increasing its dominance to 65.3%, and a loss of market capitalization to revisit levels of the last quarter of 2019.
The current situation is being exploited very well by Bitcoin whales, which have begun to emit signals of their movements to generate enough FOMO and allow them to accumulate more wealth, as Whale-Alert points out in their official account today. Transfer of 47,000 BTC to the Bittrex exchange has been made just as the price of Bitcoin succumbed to $ 6,100 levels.
— Whale Alert (@whale_alert) March 12, 2020
Ethereum Did not Escape Coronavirus
The most important altcoin in the market, Ethereum has also suffered today. Ethereum’s double-digit price drop has led to massive network congestion. According to Glassnode, the average price of gas in ETH soared to 29 gwei, the highest in more than 1 year.
At the time of writing, Ethereum price is around $ 140.25 with a sharp contraction of -28.02% in its price, the lowest level since December 2019.