Cryptocurrencies: Is Another Crash Coming?

10 Marzo 2023 - 12:44

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Cryptocurrencies started the week in a relatively soft mood, despite last Friday’s positive momentum on the indices. Will they be able to react or will they continue their decline?

Cryptocurrencies: Is Another Crash Coming?

Last week’s decreases in the cryptocurrency sector were due to concerns over crypto-bank Silvergate rather than a general deterioration in crypto market sentiment, which accounts for the temporary lack of correlation with the Nasdaq - as also happened in the case of FTX bankruptcy.

What is worrying, however, is that while the size of possible problems caused by the Silvergate situation is relatively small compared to the cryptocurrency market as a whole, prices have not yet rebounded and bulls remain under pressure. This could indicate a potential retest of the lows.

Furthermore, the negative news on the regulatory front continued: on Friday, the SEC was once again concerned about Binance, which operates an exchange that is not registered in the United States. Furthermore, it is likely only a matter of time before regulators do a full investigation into Silvergate, which ran a banking business specializing in digital assets.

In this article, the experts of XTB analyze the potential impact on the markets of some economic-political news. XTB is a world-class one stop shop investment broker, with a global presence in over 13 countries, authorized by Consob and regulated by major financial regulatory institutions, such as FCA and KNF. The XTB platform offers access to more than 5,800 financial instruments - both instruments with real properties, shares and ETFs, as well as derivative instruments of the CFD type.

Bitcoin and Ethereum falls push altcoins lower

The average realized price of all purchased BTC remains around $20,000, near the 200-day SMA on the daily chart. If the bearish sentiment persists, we could see this level tested again.

Realized price is calculated as realized capital divided by the total supply of BTC. Measures the bid-weighted average price of what all market participants paid for their BTC. It can be interpreted as a level of support or resistance.

The number of BTC addresses holding more than 1,000 BTC has dropped sharply since March 2020, signaling a possible weakening of sentiment among so-called "whales". However, it is unclear how the figure may have been influenced by investors being able to break up funds into smaller portfolios.

A Bitcoin address is a unique identifier that serves as a virtual location to which cryptocurrency can be sent. Cryptocurrencies can be sent to Bitcoin addresses similar to how fiat currencies can be sent via email addresses.

The SOPR indicator, which measures the value of realized capital gains and losses, settled again close to 1 (neutral zone), signaling the achievement of a balance between supply and demand (white line = 1), a which is usually followed by an abrupt trend reversal.

The supply of wallets holding BTC, last active more than a year ago, has surged to an all-time high thanks to the continuation of the bull market, and is already close to 68%. The historical trend remains up and shows that over time more and more BTC has been bought and sold held by long-term investors.

Will the price of Bitcoin be able to hold on?

The price still remains around the uptrendline from which an attempt to rise is possible. However, if prices were to follow the same downward trendline, the zone to watch would become the 38.2% Fibonacci retracement of the bullish wave that started in November at $21,500 and the aforementioned 200 SMA (red line), which hovers around $20,000. So far, the bullish pattern of the golden cross, i.e. the intersection of the 100 SMA (black line) with the 200 SMA, has not yet led to the hoped-for upside.

Original article published on Italy 2023-03-09 15:11:25. Original title: Criptovalute: settore in difficoltà, in arrivo un altro crollo?

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