Why Bitcoin Price Has a High Chance of Resting at $16,000
Bitcoin price is trending to the downside and looks set to retest its yearly lows of $15,550. The nascent asset class faces the fallout from FTX’s collapse. Once the world’s second largest crypto trading platform, the company filed for bankruptcy protection.
As of this writing, the Bitcoin price is experiencing massive selling pressure. The cryptocurrency is trading at $15,900 with a loss of 4% and 2% in low and high time frames. BTC has been more stable than other assets in the crypto top 10 by market capitalization.
In contrast, Ethereum (ETH) recorded a 10% loss over the past week, while Cardano (ADA) and Dogecoin (DOGE) recorded a 9% and 14% loss respectively over the same period. Other cryptocurrencies follow this trend except XRP, which still maintains some profit.
Low volume week could be a drag on Bitcoin price
The general sentiment in the market seems biased against another flash crash. However, the US market may become less active in the coming days.
The country will begin its Christmas-related holidays this week as citizens celebrate Thanksgiving Day. Thus, the market may see low trading volumes.
According to one analyst from Material Indicators, the long holiday week could extend losses in the Bitcoin price and the crypto market, especially these days with heavy pessimistic sentiment and negative news in the nascent asset class:
Note that it is a holiday week in the US, so volume may be low. Could see some tax loss harvesting in Q4 in TradFi contributing to downward momentum in Crypto driven by FTXscam contagion related FUD.
The analyst shared the photo below showing crypto exchange Binance’s order book. On this trading floor, the bid (buy) side appears thicker.
At the time of writing and on higher timeframes, many more buy orders could act as support for the Bitcoin price. In that sense, Material Indicators and others believe that the crypto market is bound for sideways price action.
This theory may be invalidated if there is new negative news related to FTX’s collapse or the contagion destruction in the industry. According to rumors circulating across social media platforms, there is a high risk of a major crypto company filing for bankruptcy in the coming days.
The macroeconomic landscape is improving, with US inflation finally peaking. According to Fidelity’s macro analyst Jurrien Timmer, this inflation peak will affect the markets positively. The crypto market can bounce back if the bulls can defend the current range and the previous annual declines.
Eye on 2023: If inflation has peaked for this cycle (on pace of change), we should reach “Peak Fed” of around 5% in the next quarter or two. After a relentless movement of the monetary target items this year, it should at least provide some degree of clarity. pic.twitter.com/rGaZRNfaQK
— Jurrien Timmer (@TimmerFidelity) 21 November 2022
