Bitcoin’s Correction Extends Generating Nearly 8% in Weekly LossesBitcoin entered the week of January 18th in a good posture after suffering a 7.56% correction over the weekend. Indeed, the pioneer cryptocurrency opened Monday’s trading session at a low of $35,904.50 and quickly started climbing. By Tuesday, January 19th, at 16:00 UTC, BTC’s price had risen by nearly 6% to hit a weekly high of $37,875.00, according to CEX.IO’s exchange rate.
From that point on, Bitcoin began a massive downward trend that saw its market value drop by more than 24.10%. It went from Tuesday’s high of $37,875.00 to trade at a low of $28,810.10 on Friday, January 22nd, at 00:00 UTC. Consequently, generating more than $2.95 billion in long and short BTC positions across the board.
Despite the massive losses, on-chain data shows that some market participants took advantage of the downswing to buy tokes at a discount. The number of addresses with more than 1,000 BTC surged by 1.50% within such a short period. Roughly 32 new whales joined the network as Bitcoin’s price tumbled.
75% of retail CFD investors lose money
The significant spike in buying pressure helped push prices back up. As a matter of fact, Bitcoin rose by 17.87% to hit a high of $33,900.00 on Friday, January 22nd. But as the weekly trading session came to an end, some of those investors who bought the dip appear to have booked profits.
Bitcoin holders incurred a weekly loss of 7.92% as prices closed Friday at a low of $33,059.70.
Ethereum Yields Minimal Weekly Returns While Downside Potential Gets Capped
Ethereum was able to momentarily decouple from Bitcoin after the week of January 18th kicked off. Although the smart contracts token opened Monday’s trading session at a low of $1,233.67, it quickly entered an impressive uptrend. According to the exchange rate of CEX.IO, its price surged by nearly 17% to hit a new all-time high of $1,440.00 on Tuesday, January 18th, at 12:00 UTC.
Nonetheless, Ether suffered a steep correction like the rest of the cryptocurrency market, plummeting by 27.80% after it reached new record highs. The second-largest cryptocurrency by market capitalization saw its price retreat throughout the rest of the week to hit a low of $1,040.00 by Friday, January 22nd, at 00:00 UTC.
Even though Ethereum took a considerable nosedive, its network activity suggested it is still primed for higher highs. On-chain data reveals that market participants seemingly entered an accumulation phase over the past few months as a significant number of tokens have been depleted from cryptocurrency exchanges. Nearly 2.40 million ETH have been taken out of trading platforms since August 2020, representing a 12.50% drop.
The substantial decrease in supply is negatively impacting the rate at which Ethereum can be exchanged for cash. As Ether’s velocity decreases, its downside potential is being capped while the chances for higher highs increase.
Such market behavior was visible in Ether’s price action. Following the swing low, Etheruem rebounded by 18.66% to close Friday’s trading session, January 22nd, at $1,239.04. As a result, investors were able to generate a weekly return of 0.08%.
On the Vicinity of Higher Highs
High net worth individuals seem to be buying Bitcoin and Ethereum at every dip, showing the high interest that institutional investors have for this new asset class.
Such a significant spike in demand is expected to accelerate as inflation continues consuming sovereign currencies’ purchasing power like the U.S. dollar. The new $1.9 trillion coronavirus relief plan that the U.S. Congress prepares to unveil could see a massive exodus of institutional capital from the traditional markets into the cryptocurrency industry.
As trust erodes in the global financial system, it is very likely that Bitcoin and Ethereum advance further as these cryptocurrencies represent a new paradigm. But for the uptrend to resume, BTC must hold above $30,000, and ETH has to keep the $1,000 level support.
Only under these circumstances will the flagship cryptocurrency advance towards $50,000 and the smart contracts giant to $2,000 or higher.
Konstantin Anissimov, Executive Director at CEX.IO