Bitcoin Appears Primed For A Super Bullish Turnaround As The FTX Debacle Settles
Bitcoin continued to consolidate Tuesday following a chaotic month characterized by a widespread liquidity crunch fuelled by the collapse of FTX.
As of writing, the largest cryptocurrency by market capitalization was trading at $16,467, up a mere 1.57% over the past 24 hours. For the past three weeks, Bitcoin has been holding steadily above the $16,000 psychological level despite plunging briefly below $15,500 last week.
Over the past week, crypto markets have calmed with Monday’s report about lending giant Blockfi’s fallout barely nudging crypto prices. This steadiness comes even as several crypto observers speculate that the recent fallouts may help strengthen the crypto industry by forcing regulators to ratchet up their efforts.
That said, as the dust settles following the collapse of FTX, analysts are getting a clear picture of what has been happening behind the scenes. According to on-chain analysis firm Glassnode, with the FTX fallout triggering one of the most significant capitulation events in Bitcoin’s history and flushing billions of USD value out of underwater investors, “the market remains in a degree of stasis, likely needing time to fully digest recent volatility.”
In a Monday report, the firm noted that the cryptocurrency’s price was most likely at a point of inflection, having plunged to levels akin to the 2018 bear market. “The characteristics of this capitulation bear several similarities to the darkest points during the 2018 bear market,” wrote Glassnode. Moreover, the firm noted that the current unrealized loss held by the actively traded coin supply was effectively at an all-time low, rivalling only the very bottoms of the 2015 and 2018 bear cycles.
“With such a chaotic year to date, the resolve of Bitcoin holders has been firmly tested to a historic degree throughout 2022. So much so there are barely any precedents. Those few analogues that exist in Bitcoin history, albeit small in sample size, turned out in hindsight to be the points of absolute seller exhaustion,” the firm added.
Although the signs seem promising for Bitcoin, it remains to be seen whether the recent sell-off is just a continuation of the bearish trend or perhaps a trigger of a bullish turnaround.
According to Michaël van de Poppe, CEO & Founder of the Eight Global trading platform, the $16,000 support is crucial for Bitcoin.
“Makes sense after this bounce, as we’ve created a Higher Low on Bitcoin and aiming at resistance again. Taking out the range between $16.5-16.8K would trigger continuation towards $18K,” he tweeted.
However, Crypto analyst “Rekt Capital” notes that this month’s close could determine Bitcoin’s trajectory. According to him, when BTC lost the $19500 level as support, it broke down into the $13900-$19500 Monthly Range. “Monthly Candle Close is coming up soon. A Monthly Close below $19500 would likely confirm the $13900-$19500 Range as its new playground,” he wrote.
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