Bitcoin price falls to $31K as traders prepare for a ‘rocky’ road and more downside

2 years ago

“When it rains, it pours” is an aged saying uncovering caller relevance successful the cryptocurrency markets connected May 9 arsenic traders look different time of symptom and the existent terms diminution brings Bitcoin (BTC) to its lowest level successful 2022.

Data from Cointelegraph Markets Pro and TradingView shows that the BTC selloff connected Monday intensified arsenic the trading time progressed with Bitcoin hitting a regular debased of $31,000 arsenic bulls scrambled to equine what amounted to a anemic defense.

Here’s a look astatine immoderate of the developments that led up to Monday’s terms declines and what traders tin look for arsenic the crypto marketplace heads deeper into carnivore territory.

Further downside is simply a possibility

Bitcoin bulls person struggled to found a coagulated level of enactment implicit the past mates of months due to the fact that bears person been persistent successful their thrust to propulsion the terms lower.

Currently, BTC terms down 50% from its all-time precocious successful November and on-chain investigation steadfast Glassnode noted successful a caller study that this diminution “remains humble erstwhile compared to the eventual lows of anterior Bitcoin carnivore markets.”

As shown successful the graphic above, the drawdown successful July 2021 reached a highest of -54.2% portion the “bear markets of 2015, 2018 and March 2020 capitulated astatine lows betwixt -77.2% and -85.5% disconnected the all-time high.”

Network profitability has besides diminution to levels that are akin to what was seen during the late-2018 and precocious 2019-2020 carnivore markets.

Glassnode said,

"It should beryllium noted that some instances were anterior to the last capitulation flush retired event. As such, further downside remains a risk, and would beryllium wrong the realm of humanities rhythm performance."

Traders are taking a risk-off approach

A deeper dive into the on-chain information shows that the capitulation by Bitcoin holders has intensified successful caller weeks arsenic the terms has continued to inclination lower.

Evidence for this capitulation tin beryllium recovered looking astatine the Bitcoin speech interest dominance, which measures what percent of the fees connected the Bitcoin web was paid to deposit BTC to an exchange.

According to Glassnode, the abrupt spike successful the Bitcoin speech interest dominance to 15.2% is the second-highest level successful past and “further supports the lawsuit that Bitcoin investors were seeking to de-risk, merchantability and/or adhd collateral to borderline successful effect to marketplace volatility.”

Additional grounds of a emergence successful risk-off sentiment tin beryllium recovered looking astatine stablecoin supplies, which person declined implicit the past 2 months aft expanding from $5.33 cardinal to $158.25 cardinal since the marketplace selloff successful March 2020.

After reaching a highest of $161.53 cardinal successful aboriginal April, the aggregate stablecoin proviso has declined by $3.285 cardinal arsenic an uptick successful redemptions of USD Coin (USDC) has outpaced inflows crossed each stablecoin tokens.

Glassnode said,

“Overall, determination are a fig of signals of nett weakness successful the space, galore of which bespeak that risk-off sentiment remains the halfway marketplace presumption astatine this time.”

The anticipation of holding supra $30,000

The caller weakness crossed the marketplace has led galore crypto traders to flip bearish and judge the anticipation of a diminution to $28,000, which has started to pique the contrarian perspectives of immoderate analysts including futures trader Peter Brandt, who posted the pursuing tweet addressing the alteration successful sentiment.

Now that 28,000 is truthful wide accepted arsenic downside people I americium forced to alteration my view. Either terms holds supra 30,000 oregon tanks done 28,000

— Peter Brandt (@PeterLBrandt) May 8, 2022

It remains to beryllium seen what comes adjacent for BTC, but it's champion to hole for much volatility due to the fact that macro planetary events proceed to enactment unit connected fiscal markets.

Glassnode said,

“Bitcoin remains highly correlated to the broader economical conditions, which suggests the roadworthy up whitethorn unluckily beryllium a rocky one, astatine slightest for the clip being.”

The wide cryptocurrency marketplace headdress present stands astatine $1.467 trillion and Bitcoin’s dominance complaint is 41.7%.

The views and opinions expressed present are solely those of the writer and bash not needfully bespeak the views of Cointelegraph.com. Every concern and trading determination involves risk, you should behaviour your ain probe erstwhile making a decision.

View source