Deconstructing recent Bitcoin price crash as bankrupt FTX exchange’s assets disappear

by James · November 23, 2022

The Bitcoin price has risen 5.2% in the last twelve hours after falling 27% due to the collapse of the FTX exchange.
Investors can expect Bitcoin (BTC) to extend its recovery rally if it can turn the previous weekly opening of $16,331 into a support floor.
A daily candlestick below $15,721 will invalidate the bullish thesis for the major crypto.

Bitcoin price suffered a fatal fall due to the implosion of the cryptocurrency exchange FTX. As a result, the crypto market fell, and the exchange filed for bankruptcy on November 11.

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FTX assets are missing or stolen

The untimely collapse of the FTX exchange caused huge losses to many investors, retail and institutions as their money is still stuck in the exchange. To make matters worse, there was a hack shortly after the bankruptcy was filed, which worsened the already grim situation.

The bankruptcy hearing will take place in a federal court in Delaware. Representing FTX at this hearing is James Bromley, a partner at law firm Sullivan & Cromwell, who stated that a “significant amount of assets have either been stolen or are missing.:

The US Securities and Exchange Commission (SEC) is currently investigating founder Sam Bankman-Fried’s actions as head of FTX.

Bromley further added,

FTX was in control of inexperienced and unsophisticated individuals, some or all of whom were compromised individuals.

FTX exploits control the market

The now-defunct FTX exchange had approximately $600 million in assets stolen by an exploiter. When this hacker started unloading his money, the market reacted, triggering another selloff.

The Bitcoin price crashed about 6% between November 19 and 22 as a result of low liquidity over the weekends. But as the new week began, bulls seemed to have come out of hiding, indicating a sudden shift in market sentiment.

Bitcoin price crash is slowly coming undone

Bitcoin price is showing a strong recovery after sweeping below the November 10 swing low of $15,558 on November 22. This sell-stop liquidity run triggered market makers to trigger a buying spree, which was also a good spot for buyers who were off the side. result, BTC kick-started a 7% rise.

There are a few levels that investors need to be wary of.

The previous weekly open or Monday’s high of about $16,331.
The Pont of Control (POC) at $16,716, also known as the highest traded volume level between November 2nd and November 23rd.
Last Monday’s high of $17,190
June drops to $17,593

In order to undo the 27% crash caused as a result of FTX crash, Bitcoin price needs to turn the $17,593 barrier into a support floor. However, it is a medium and long-term picture. The short-term outlook suggests that the upside for BTC is limited to $17,593.

So traders looking to open long positions can do so after a retest of the previous weekly open at $16,331. For a successful bullish move, the Bitcoin price must cut through the falling trend line connecting the series of lower highs formed since November 11th. After this, the major crypto needs to flip the POC at $16,716.

As shown in the volume profile indicator, there is a high volume node in this area, making it a difficult level to crack. Therefore, buyers must come together to overcome this blockade. A four-hour candlestick close above $16,716 followed by an increase in buying pressure could trigger a Bitcoin price rally that smashes through last Monday’s high of $17,190 and marks the June lows of $17,593.

For swing traders, the conversion of $17,593 into a support level is critical. Doing so opens the way to $19,011, which is the highest volume traded in the last eleven months. Beyond this level, the volume profile shows a small cluster of high volume nodes at $19,715. Traders can book profits around this level or wait for a retest of the $20,000 psychological level.

BTC/USDT 4-hour chart

While the outlook for the Bitcoin price is positive following the recent mining rally, investors should not get ahead of themselves. A breakdown of the $16,331 support level would signal weakness among buyers or exhaustion.

If this move is followed up with a decisive reversal of the $15,721 support level to a resistance barrier, it will invalidate the bullish thesis for BTC. In such a case, the Bitcoin price could crash 5% to mark the psychological level of $15,000.