Bitcoin’s Nosedive below $45,000 Can Open Way to Continued Correction, Ethereum’s Repeats after BitcoinThe whole week of 22nd February has been heavily marked with red for BTC/USD and ETH/USD trading pairs. Bitcoin’s market capitalisation shrank by over $100 million, while BTC/USD lost 21%. ETH/USD lost over 25% or about 500 price points. The drawdown in the price of both cryptocurrencies may open the way to lower lows in the near future and a further corrective move.
Bitcoin Sellers Took the Lead, Took BTC/USD below 45,000
BTC/USD started the week at 57,499 near the all-time high at 58,400, based on the CEX.IOpricing. In the first four hours of Monday’s trading session, BTC/USD declined to 56,000, which was an important support level in intraday terms. The level produced some buying pressure for the pair but only for the next four hours, as BTC/USD closed the 4-hour candlestick between 04:00 and 08:00 UTC at 46,479.
That, however, made no lasting influence, and BTC/USD had broken down below 56,000 and dropped below 53,500 by 16:00 UTC. That was a signal for a big sale, as the Bitcoin market had been overheated. In confirmation of that hypothesis, BTC/USD made a huge rollercoaster swing in the interval between 13:00 and 15:00 UTC, falling from 53,677 to 47,400 and bouncing back up. Meanwhile, Glassnode, an on-chain data aggregator reported that high-net-worth Bitcoin holders had sold 140,000 BTC, which was proof of traders’ readiness to sell BTC/USD big time. There was a slight upside recovery to 56,000 at the end of Monday, but with the start of Tuesday’s session the selling went on.
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By 09:00 UTC of Tuesday, 23rd February, BTC/USD had already been at 46,500 as per Bitstamp’s exchange rate. Form 09:00 UTC, BTC/USD continued sideways, with high volatility taking place in the price action. The pair was edging sideways within the corridor of 45,000 – 49,000 until 01:00 UTC of Wednesday, 24th February. At that time a rebound above 49,000 started to take place and continued until 05:00 UTC, with 51,000 topped out.
The volatility reduced considerably, as the pair continued edging sideways within the price range of 50,000 – 51,000. At 13:00 – 14:00 UTC, a drawdown to 49,000 happened; afterwards, BTC/USD continued between 48,000 – 50,000 until the end of Wednesday. The sideways fluctuations continued on Thursday, 25th February, until 12:00 UTC. At 12:00 – 14:00 UTC, BTC/USD bounced to 52,000. Afterwards, BTC/USD began another continued downfall, which continued to 45,000 on Friday, 26th February. The falling stopped at 08:00 UTC, as the zone offered a buying opportunity.
BTC/USD had bounced to 48,265 by 17:00 UTC and then reversed downwards until 23:00 UTC, almost reaching 45,000, and closed Friday at 45,447. On Saturday, 27th February, BTC/USD the bulls continued supporting the trading pair with buying volumes, and BTC/USD briefly rose to 48,100 between 0200 – 02:45 UTC. The pair continued sideways until 07:00 UTC, once breaking above the 50-period hourly SMA, but was eventually driven down below 47,000 between 08:00 and 09:00 UTC. The upside attempts at the SMA continued unsuccessfully until the end of Saturday. On Sunday, 28th February, selling pressure increased and saw BTC/USD gradually head down to 43,067 at its lowest. The capitalisation below 44,000 on the 4-hour timeframe was an indication of continuing selling bias in the trading pair.
Hope for Bitcoin Bulls
There was some news in the week of 22nd February that kept up Bitcoin bulls’ hopes of an upside recovery. Square, Inc. that had invested $50,000 million in Bitcoin in October 2020 made another Bitcoin purchase worth $170 million on 24th February 2021. Besides that, MicroStrategy – the corporate frontrunner among Bitcoin investors – bought 19,452 more BTC worth $1.026 billion at an average price of $52,765. This new purchase had brought MicroStrategy’s exposure to Bitcoin to 90,531 BTC.
These tendencies clearly showed that high profile investors were happy with the Bitcoin drawdown and were ready to buy the dip. This shows that Bitcoin continues to be looked upon as a solid financial instrument, and every downside correction is going to be met with substantial buying volumes.
Up or Down for BTC/USD in the Near Term?
The decline to nearly 43,000 and a stabilisation below 44,000 on the 4-hour timeframe was a signal of continuing bearish bias in BTC/USD, promising lower lows. Still, some bullish momentum remains to be present, and a breakthrough above 48,000 and above the 50-period 4-hour SMA would signal a change of bias and an upside recovery gaining traction. On the contrary, another decline to 43,000 will mean a continuation of bearish price action, with prospects of getting back to testing the 31,000 support level.
Therefore, we shall soon get answers on where BTC/USD will go next. With the pair edging higher towards 48,000 in the morning hours of Monday, the odds for a breakthrough are presently going higher.
1,392 Supports ETH/USD
ETH/USD opened the week of 22nd February at 1,933.4 and headed straight down from the start of the day, briefly getting below the 50-period 4-hour SMA with the lower wick of Monday’s first 4-hour candlestick reaching 1,867.3. The SMA gave ETH/USD some transitory support, but it continued sinking lower until 09:00 UTC on Tuesday, 23rd February, with support being found at 1,440. The trading pair continued sideways until the end of Tuesday, fluctuating within a considerable range of 1,360 and 1,600.
From the start of Wednesday, 24th February, the ETH/USD trading pair headed upwards to reach 1,715 and break above the 50-period hourly SMA. The volatility shrank considerably, as ETH/USD spent most of the time until 18:00 UTC on Thursday, 25th February within the range of 1,586.4 – 1,662, being regularly supported by the 50-period hourly SMA.
ETH/USD, ETH/USD headed down from 18:00 UTC on Thursday through to 08:00 UTC on Friday, 26th February. The pair eventually hit 1,402 at the minimum and continued edging sideways between 1,424.7 and 1,560 until the end of Saturday, 27th February, with the 50-period hourly SMA upkeeping the ETH/USD bearish momentum.
Another downswing took place on Sunday, 28th February, with a minimum at 1,299.6. However, an upside recovery that began at 19:00 UTC and continued through to the end of Sunday, with the 1,392.2 support level letting ETH/USD close the week at 1,417.5 as per the CEX.IO pricing. On top of that, ETH/USD finished Sunday in a hammer candlestick on the daily timeframe, which coupled with the 1,420 support level gives increased potential for a full-fledged upside recovery in the near term.
Grayscale Ethereum Trust Buying the Dip
It became known that the intraday pullback in ETH/USD between Tuesday, 23rd February, and Wednesday, 24th February, from the mid-to-lower 1,400s to above 1,700 coincided with a purchase of 10,000 ETH by Grayscale Ethereum Trust, which brought its Ether exposure to 3.17 ETH.
The bullish market reaction to the purchase clearly shows that big players’ moves have a strong impact on the Ethereum market. And the purchase itself shows that high-profile investors, who constitute most of Grayscale clients, have trust in Ethereum in the long term, which can result in continued market growth for the smart-contract pioneer.
Konstantin Anissimov, Executive Director at CEX.IO