Crypto market aftershock?

Crypto market aftershock?

Bitcoin is trading just below 16,000 by the start of active trading in Europe on Monday, down 23.6% from levels seven days ago. Ethereum plunged 25% to $1190. Other top altcoins in the top 10 fell from 20% (BNB) to 29.6% (XRP).

Total crypto market capitalization fell 27% during the week to $757 billion, the lowest level since December 2020, according to CoinMarketCap.

Bitcoin and the overall crypto market tumbled to two-year lows last week amid the bankruptcy of cryptocurrency exchange FTX and related companies. We continue to compare what is happening with the banking crises of the early 20th century, which led to the formation of modern securities market regulation with more transparency for investors but less anonymity.

Bitcoin fell to $15.8,000 by Monday morning, repeating the lows of Wednesday through Thursday. This is a timid attempt by speculators to create a “double bottom”, which is a reversal pattern in technical analysis. But we also highlight the impressive sell-offs that have hit the crypto market on rebounds from ever-lower highs.

This behavior still indicates huge selling interest and creates risks for a new, deeper decline. This could be the $12-14k range in a reduced liquidity environment.

The collapse of FTX is likely to cause further damage to the reputation of second tier altcoins and postpone the new alt-season for some time. However, the top two dozen cryptocurrencies with working projects remain a good long-term bet for a diversified crypto portfolio.

Background news:

According to Glassnode, the share of profitable Bitcoin addresses online has fallen to 50% – the least since March 2020. Short-term investors who held BTC for less than six months have once again capitulated. Miners were also part of the reset, data from the CryptoQuant platform shows. Long-term investors, who now control up to 35.4% of the total BTC supply, also suffered significant losses.

The current situation in the cryptocurrency industry mirrors the financial crisis of 2008, and more companies could collapse in the coming weeks, warned Binance CEO Changpeng Zhao. He said the market had not yet felt the effects of the FTX crisis.

JPMorgan believes the collapse of FTX will help the cryptocurrency industry recover and prompt regulators to speed up regulation of the sector.

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