Bitcoin (BTC) Avoids Heavy Losses Amidst USDTerra Driven Meltdown
- Bitcoin (BTC) fell by a relatively modest 6.44% on Wednesday as the broader market took a hit.
- TerraUSD (UST) and Terra (LUNA) dragged the majors into the deep red, with UST’s de-pegging raising the prospects of a regulatory overhaul.
- Bitcoin (BTC) technical indicators flash red. This morning, bitcoin sits well below the 50-day EMA.
Bitcoin (BTC) fell by 6.44% on Wednesday as TerraUSD and the NASDAQ 100 influenced. Reversing a 3.11% gain from Tuesday, bitcoin ended the day at $29,017.
A choppy session saw bitcoin find early support before succumbing to market forces. Bitcoin hit a late morning intraday high of $32,136 before sliding to a late day low of $28,087.
Bitcoin’s loss was modest relative to the broader crypto market that struggled throughout the day.
Investors Turn to Stablecoins Amidst USDTerra Fueled Meltdown
On CoinMarketCap, stablecoins became a feature of the top 10 cryptos, with Tether (USDT) and USD Coin (USDC) sitting behind bitcoin and Ethereum (ETH). Binance USD (BUSD) moved into the number 8 spot, leaving little room for the altcoins.
UST faired better, recovering to $0.78 levels to rank at #11.
Crypto Market Sell-off Sees $300 Billion Market Cap Wipeout
Performance-wise, the losses were unprecedented. LUNA ended the day with a 94% loss.
The total crypto market cap ended the day at $1,264 billion, down $149 billion and $290 billion for the current week.
Bitcoin Correlation with NASDAQ 100 Adds to Crypto Woes
On Wednesday, the NASDAQ tumbled by 3.18% as investors responded to April inflation figures from the US. While softer than in March, the numbers were strong enough to support a more aggressive Fed rate path trajectory.
In April, the annual rate of inflation softened from 8.3% to 8.0% versus a forecasted 7.7%.
Both bitcoin and the NASDAQ succumbed to the numbers after an initial move northward.
Bitcoin Fear & Greed Index Slides to
Today, the Fear and Greed Index held steady at 12/100. The lack of movement came despite the bitcoin and broad-based crypto sell-off.
This morning’s value remained above the most recent low of 8/100 on March 14, 2020. On Wednesday, the Index had also avoided a decline despite the market angst over TerraUSD and LUNA.
For bitcoin investors, the “Extreme Fear” zone relays investor anxiety over the threat of another sell-off. Further fallout from the TerraUSD and LUNA events could bring sub-10/100 into play.
Bitcoin (BTC) Price Action
At the time of writing, BTC was up 0.39% to $29,130.
BTC will need to move through the $29,749 pivot to target the First Major Resistance Level at $31,401 and resistance at $31,500.
BTC would need the broader crypto market to support a return to $31,000.
An extended rally would test the Second Major Resistance Level at $33,794 and resistance at $34,500. The Third Major Resistance Level sits at $37,845.
Failure to move through the pivot would test the First Major Support Level at $27,358. Barring another extended sell-off, BTC should steer clear of sub-$25,000 levels. The Second Major Support Level at $25,701 should limit the downside.
Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. BTC sits below the 50-day EMA, currently at $33,777. This morning, the 50-day pulled back from the 100-day EMA. The 100-day EMA fell back from the 200-day EMA; BTC negative.
A move through the 50-day EMA would support a run at $35,500.