Bitcoin (BTC), as well as many stock markets, saw a brief rebound after the Federal Open Market Committee (FOMC) meeting on Wednesday. However, we warned that it may not be the end of the current downtrend due to high fears in financial markets. However, the revival was even shorter than expected.
Bitcoin Fear and Greed Index is 22. Extreme Fear
Current price: $36,502 pic.twitter.com/q6lvar5rKu
— Bitcoin Fear and Greed Index (@BitcoinFear) May 6, 2022
Bitcoin price drops by 9%
The bitcoin price touched almost $40,000 on Wednesday evening after the FOMC meeting. Bitcoin then declined steadily from $39,850 to $39,500 by late yesterday afternoon. Then bitcoin started to plummet towards $36,000 with a dip to $35,800.
Overnight bitcoin held up around $36,500, but at the time of writing, bitcoin is falling back to a price of $36,000 on KuCoin and $34,050 on Bitvavo. This means that BTC is currently no less than 9% in the minus.
Huge bitcoin long squeeze
Bitcoin’s price decline was accompanied by a huge so-called long squeeze† According to data from coin glass More than $200 million worth of futures contracts were liquidated in the past 24 hours, mostly lung positions. For all cryptocurrencies, that was even $400 million. The decline was also accompanied by a redistribution of BTC among long-term holders and whales.
Addresses holding 1,000 to 10,000 #BTC have offloaded or redistributed 70,000 #Bitcoin in the past three days while the balance on #crypto exchanges increased by 10,000 $BTC† pic.twitter.com/YNauYG6njx
— Ali Martinez (@ali_charts) May 5, 2022
Bitcoin correlation with stocks
In addition, the decline in bitcoin price also coincided with red-colored stock markets such as the Nasdaq and S&P 500. Asian stock markets also open in the red today. The riskier stocks of technology companies, with which bitcoin currently still has a high correlation, are particularly hard hit. The decline also again coincided with a rising US dollar index (DXY) rate, although it is falling sharply at the time of writing.
Ugly day for markets. But remember, it could be worse for #Bitcoin† Year-to-date, it is performing roughly equally bad as the Nasdaq-100. Considering that the Nasdaq-100 lists some of the largest companies and $BTC is still a relatively small and new asset, that is not too bad. pic.twitter.com/u5r3QXF0DP
— Jan Wustenfeld 🇺🇦 (@JanWues) May 5, 2022
Will the bitcoin price break out of the trend channel?
Bitcoin has been in a downtrend since late March, but may still have been in an uptrend since the low from the end of January. However, the price has now also broken out of this trend channel and that may not be a good sign. Bitcoin may still be in an uptrend since the low from last summer, when the price plunged below $30,000. In the meantime, we have to take into account that the price may again test these lows.
Not going to lie, that’s ugly pic.twitter.com/eA0cv22ubs
— Charles Edwards (@caprioleio) May 5, 2022
More volatility is expected
Still, some analysts, such as veteran Peter Brandt, are reporting that the financial markets may reverse trend and that could give bitcoin some leeway as well.
I stand in agreement. Not a Head and Shoulders https://t.co/ViWSFYhrXE
— Peter Brandt (@PeterLBrandt) May 5, 2022
Meanwhile, we see a significant influx of stablecoins to exchanges. We expect to see more volatility with prices in the near future.
There has been a significant amount of stablecoins inflow to derivative exchanges.. Again, there are intense #BTC inflows to derivative exchanges, and Estimated Leverage Ratio is at historic peak.. The market is preparing for a very serious volatility.. #Bitcoin #Crypto #ETH pic.twitter.com/4RODZVv52L
— Oguzhan Şengör (@OguzhanSengor) May 5, 2022
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