With fears of an inflationary wave sinking portfolios, investors are not only dumping bonds and trimming their equity positions but are also offloading crypto-assets. The current sentiment of pessimism is influencing a dramatic selloff.
As the carnage continues, Arthur Hayes observed that Bitcoin is forming a base at $20k while Ethereum is attempting to limit its losses to $1k. A fall below these levels, however, could be uglier for the two, warned the Hayes in a recent Twitter post.
The former BitMEX chief explained that a breach from the said levels is likely to trigger a massive sell pressure in the spot markets as dealers hedge themselves. However, there might also be scenarios where many OTC dealers fail to hedge themselves and cover their positions, ultimately sparking more sell-side pressure on both Bitcoin and Ethereum.
“As far as the charts go, you better get out your Lord Satoshi prayer book and hope the lord shows kindness on the soul of the crypto markets. Bc if these levels break, you might as well shut down your computer bc your charts will be useless for a while.”
The rumors about potential Celsius insolvency placed a tremendous bearish strain on prices already weak from Friday’s CPI print already weighing on the market. Crypto-asset trading firm, QCP Capital, noted similar liquidation levels that market participants need to look out for.
“We have been expressing concern about the collapse of a significant credit player since the LUNA blowup. The market is now panicking about the impact and contagion if Celsius becomes insolvent. Some key liquidation levels that the market is looking out for are 1,150 in ETH, 0.8 in stETH/ETH, and 20,000 in BTC. We are getting uncomfortably close.”
Popular analyst “Rekt Capital” speculated that Bitcoin might be “performing Macro Double Bottoms at the 200-week moving average” while observing that, historically, bear market capitulation has witnessed a firm level of support at Bitcoin’s 200-week moving average. If this scenario plays out, Rekt Capital said that BTC is very close to forming its first “Macro Bottom” at the 200-week MA at around $23,000.
Should this break, Bitcoin could spiral down to more extensive losses. In which case, pseudonymous on-chain data analyst “whalemap” said that the cryptocurrency could head to its “ultimate max pain bottom” at $13,331.