Bitcoin (BTC) fell all the way to $30,000 this week. This is largely due to the sheer amount of fear and uncertainty in the traditional financial markets that bitcoin correlates strongly with. Meanwhile, however, a fiasco with the terra (LUNA) altcoin is causing even more sales pressure.
Bitcoin Fear and Greed Index is 12 ~ Extreme Fear
Current price: $31,043 pic.twitter.com/mJJMK3rOhl
— Bitcoin Fear and Greed Index (@BitcoinFear) May 11, 2022
Bitcoin price 2.5% in the min
The bitcoin price fell to a low of $30,000 Monday night. Bitcoin then made a small bounce, but the price did not go beyond $32,300 yesterday morning. Yesterday afternoon, bitcoin was again rejected around this price and then dropped to $30,400 around midnight.
By early this morning, bitcoin recovered slightly, but was rejected as early as $30,650 and then plummeted to $30,300. At the time of writing, bitcoin is recovering to a price of $31,000 on KuCoin and $29,500 on Bitvavo, but is still down 2.5% today.
Terra crash has consequences
Terra (LUNA) was recently massively buying bitcoins to serve as a reserve for the UST stablecoin. This accumulation had a bullish effect on the BTC price. Meanwhile, the Terra project seems to dump all 80,000 BTC, the UST price has decoupled and the LUNA price has crashed hard. This is putting even more selling pressure on BTC and the market is concerned that this incident may attract regulatory attention.
George Soros (played by market) appears to have beaten the Bank of England (played by LUNA).
The current state of play:
– LFG #Bitcoin Balance = 80.394 $BTC -> 0
– Gemini Exchange = +80,394 $BTC (could be custody and/or sold)
† $LUNA price $119 -> $5.8
† $UST $1 –> $0.42 pic.twitter.com/4QeZeD73Ya
— _Checkmate 🔑⚡🦬🌋 (@_Checkmatey_) May 11, 2022
Bitcoin correlation with S&P 500 on ATH
Despite this, bitcoin was already in a downward trend, as were the stock markets. The correlation between bitcoin and the S&P 500 even has a new one all time high reaches:
Bitcoin correlation with the S&P 500 has reached a new frustrating all time high. pic.twitter.com/NXMnmmvKex
— Mati Greenspan (@MatiGreenspan) May 10, 2022
Still, opinions remain divided as to whether bitcoin has bottomed out around this $30,000 mark. We don’t see any convincing yet rebound take place. Before bitcoin can really recover, we may have to wait for stocks like the S&P 500 to bottom out as well. However, according to Ecoinometrics, historically that could take some time.
Historically speaking this stock market drawdown is already pretty bad.
But for the SP500 your typical big correction isn’t necessarily happening fast.
It often takes a while to find the bottom… 📉🧐👇 pic.twitter.com/yGXdMKMswH
— ecoinometrics (@ecoinometrics) May 10, 2022
Meanwhile, for the first time since the March 2020 crash when the coronavirus pandemic broke out, more than 50% of bitcoin investors are in loss, IntoTheBlock reports:
The % of addresses currently holding $BTC that are profiting from their positions or “in the money” has dropped below 50% for the first time since March of 2020.
At the current price, 46.54% of the addresses are in a state of profit.
— IntoTheBlock (@intotheblock) May 9, 2022
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