Data shows derivatives had little to do with Bitcoin's drop to $29K

After a brief recovery to $41,000 on June 14, Bitcoin (BTC) investors might have thought that the bear market was finally over. After all, it was the highest level since May 21 and the date that MicroStrategy (MSTR) announced a successful $500 million debt offering. The funds are usually available in one or two business days, and the proceeds would be used to acquire even more Bitcoin for the business intelligence company’s balance sheet. MicroStrategy followed this fund-raise with another surprise filing to sell up to $1 billion of its stock to buy even more Bitcoin.However, a 30% drop took place over the following week, causing Bitcoin to reach its lowest level since January 22. The $28,800 bottom might have lasted less than fifteen minutes, but the bear sentiment was already established.The sell-off was largely attributed to Chinese miners’ capitulating after they were forced to abruptly shut down their operations. Furthermore, on June 21, an official People’s Bank of China (PBoC) reiterated that all banks and payment institutions “must not provide account opening or registration for [virtual currency]-related activities.”The open question is whether derivatives played a vital part in the correction or at least displayed stress signs that may indicate an even more dangerous second leg down?The futures premium showed no signs of backwardationThe futures premium (or basis) measures the gap of longer-term futures contracts to the current spot (regular markets) levels. Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is also known as backwardation and indicates a bearish sentiment.Huobi 3-month Bitcoin futures basis. Source: SkewFutures should trade at a 5% to 15% annualized premium in healthy markets, otherwise known as contango. On the worst moment on June 22, this basis bottomed at 2.5%, which is considered bearish but not enough to trigger any red flag.There was zero panic from top tradersThe top traders’ long-to-short indicator is calculated using clients’ consolidated positions, including spot, margin, perpetual and futures contracts. This metric gathers a broader view of professional traders’ effective net position.Derivatives exchanges’ top traders long-to-short ratio. Source: BybtDespite the discrepancies between crypto exchange methodologies, analyzing changes over time provides valuable insights. Top traders at Binance, for example, increased their long positions relative to shorts on June 22.At Huobi, there has been some increase in their net short exposure, but nothing out of the ordinary as the indicator reached the same level two days before.Lastly, OKEx top traders reduced their longs on June 20 and have since kept a 0.80 level favoring shorts by 20%.Long futures liquidations were less than $600 millionThose unaware of the price swing would never have guessed that Bitcoin traded below $29,000 based on futures liquidations data.Aggregate futures liquidations (longs in red). Source. Coinalyze.netLess than $600 million in longs were liquidated on June 22, lower than the previous day’s $750 million figure. Had longs been overleveraged, a 20% drop in less than two days would have triggered stop orders of a much greater size.Data show no current signs of stress from longs or a potential negative swing caused by derivatives markets.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Price analysis 6/23: BTC, ETH, BNB, ADA, XRP, DOGE, DOT, UNI, BCH, LTC

Bitcoin (BTC) dropped below $30,000 on June 22, which may be a final sign of capitulation. Data from Skew suggests that if Bitcoin’s price does not recover sharply in the next few days, the decline in the current quarter could be the second-worst quarter since 2014. Bull and bear phases are part and parcel of every asset class. All the legacy markets have witnessed several bear phases with massive drawdowns in the past. However, after the bear phase ends, a new bull market begins and long-term investors are usually rewarded with strong gains. The crypto markets are presently witnessing a similar bear market correction.Daily cryptocurrency market performance. Source: Coin360Every bear market is caused due to events that create fear and panic among market participants. However, unless the long-term fundamentals change, the smart investor should use the corrections to buy. Glassnode data suggests that long-term Bitcoin holders are using the current decline to accumulate Bitcoin.It is impossible to time the bottom because it will be confirmed only in hindsight. Therefore, capitulations to strong support levels during panic selling may be viewed as buying opportunities. Let’s study the charts of the top-10 cryptocurrencies to spot the critical support and resistance levels.BTC/USDTThe long tail on Bitcoin’s June 22 candlestick shows strong buying in the $31,000 to $28,000 support zone. This was the fourth instance when buyers defended the support zone, hence this becomes an important area to watch out for.BTC/USDT daily chart. Source: TradingViewThe relative strength index (RSI) has formed a bullish divergence, which suggests the sellers may be losing their momentum. If buyers drive the price above the 20-day exponential moving average ($36,260), the BTC/USDT pair could spend some more time between the $28,000 and $43,351.67 range. The longer the time spent inside this range, the stronger will be the eventual breakout from it.Contrary to this assumption, if the price turns down from the 20-day EMA, it will indicate that bears are selling on relief rallies. A break below $28,000 may result in panic selling, dragging the price to $20,000.ETH/USDTEther (ETH) broke below the triangle on June 18 and reached the critical support at $1,728.74 on June 22. The bulls purchased this dip and are attempting to stage a relief rally, which may hit a wall at the 20-day EMA ($2,325). ETH/USDT daily chart. Source: TradingViewIf the price turns down from the 20-day EMA, the bears will make one more attempt to sink the ETH/USDT pair below the $1,728.74 support. If they succeed, the pair could start the next leg of the down move that may reach $1,536.92 and then $1,293.18.The downsloping moving averages and the RSI in the negative zone indicate that bears have the upper hand. Contrary to this assumption, if the bulls push the price above the 20-day EMA, the pair may rise to the 50-day simple moving average ($2,812).BNB/USDTBinance Coin (BNB) plunged below the $291.06 support on June 21 but the bears could not break the next support at $211.70. The long tail on the June 22 candlestick indicates strong buying at lower levels.BNB/USDT daily chart. Source: TradingViewIf the bulls push and sustain the price above $291.06, the BNB/USDT pair could rise to the downtrend line. The bears are likely to defend this resistance aggressively. However, the RSI is forming a bullish divergence, suggesting the bearish momentum may be weakening. If the bulls can pierce the downtrend line, the pair could rally to $433.Conversely, if the price turns down from the current level or the downtrend line, the bears will again try to pull the pair below the $211.70 support. If they manage to do that, the pair could slide to $200 and later to $126.75.ADA/USDT Cardano (ADA) dropped to the critical support at $1 on June 22 but the long tail on the day’s candlestick suggests that bulls are defending this level aggressively. However, repeated retests of a support level weaken it.ADA/USDT daily chart. Source: TradingViewThe downsloping 20-day EMA ($1.44) and the RSI in the negative zone suggest that bears have the upper hand. If the price turns down from the current level or the 20-day EMA, the sellers will again try to break the $1 support.If they succeed, the ADA/USDT pair could witness long liquidation and a drop to $0.80 and then to $0.68 may be on the cards. Alternatively, if the bulls push the price above the moving averages, the pair may rally to $1.94.XRP/USDTXRP dived below the $0.75 to $0.65 support zone on June 20, indicating aggressive selling by traders. The break below the May 23 low at $0.65 has extended the lower highs and lower lows pattern for the coin.XRP/USDT daily chart. Source: TradingViewThe downsloping moving averages and the RSI in the negative zone suggest the path of least resistance is to the downside. If the price turns down from $0.75, it will suggest that bears have flipped this level into resistance. That could pull the price down to $0.40.Contrary to this assumption, if the bulls propel and sustain the price above the 20-day EMA ($0.80), it will indicate accumulation at lower levels. The XRP/USDT pair could then rally to $1.07. A break above the descending channel will suggest that the downtrend is over.DOGE/USDTDogecoin (DOGE) plunged sharply on June 21 and broke below the $0.21 support. The price has rebounded off the $0.16 support but the bulls have an uphill task ahead of them.DOGE/USDT daily chart. Source: TradingViewThe downsloping 20-day EMA ($0.29) and the RSI in the negative zone suggest that bears have the upper hand. Any relief rally is likely to face stiff resistance at the 20-day EMA and then at the neckline of the head and shoulders pattern.If the price turns down from either overhead resistance level, the DOGE/USDT pair could retest the $0.16 support. A breakdown and close below this level could attract further selling and the pair could decline to $0.10.Alternatively, if bulls can drive and sustain the price above the neckline, it will suggest that the bearish setup did not find support at lower levels. That could open the doors for a rally to the 50-day SMA and then to $0.45.DOT/USDTThe bulls are attempting to stall Polkadot’s (DOT) decline near the May 23 low at $13.63. However, the bulls are unlikely to have it easy as the relief rally could face selling near the 20-day EMA ($21).DOT/USDT daily chart. Source: TradingViewBoth moving averages are sloping down and the RSI is in the negative territory, suggesting the path of least resistance is to the downside. If the price turns down from the current level or the 20-day EMA, the bears will try to resume the downtrend.A break below $13 could open the gates for a further fall to the psychological support at $10 and then to $7.50. This negative view will be nullified if the bulls push and sustain the price above the 20-day EMA.UNI/USDTUniswap (UNI) declined close to the May 23 low at $13 but the long tail on the June 22 candlestick suggests that bulls are attempting to defend this level. The relief rally could now reach the 20-day EMA ($21.72).UNI/USDT daily chart. Source: TradingViewThe downsloping moving averages and the RSI below 39 suggest that bears have the upper hand. If the price turns down from the 20-day EMA, the sellers will make one more attempt to sink the UNI/USDT pair below the $13 support.If they succeed, the pair could extend the decline to $10 and then to $7. On the contrary, if bulls push the price above the 20-day EMA, it will be the first signal that the downtrend could be over. The pair could then rally to the 50-day SMA ($27.59).Related: Bitcoin holds $34K as Bloomberg likens $30K support to $4K in 2020 BTC price crashBCH/USDTBitcoin Cash (BCH) fell to $387.61 on June 22 but the long tail on the day’s candlestick shows that the bulls are attempting to defend the $370 support. The altcoin could now rise to the breakdown level at $538.11.BCH/USDT daily chart. Source: TradingViewThe downsloping moving averages and the RSI near the oversold zone indicate that bears have the upper hand. If the price turns down from $538.11, the BCH/USDT pair could retest the support at $370.A breakdown and close below this level could clear the path for a fall to $300 and then $270. Alternatively, if bulls propel the price above the 20-day EMA ($585), the pair could rise to the 50-day SMA ($822). Such a move will suggest that the pair may have hit a bottom.LTC/USDTLitecoin (LTC) broke below the May 23 low at $118.03 on June 22. However a minor positive is that the bulls purchased the dip and have pushed the price back above $118.03 today. LTC/USDT daily chart. Source: TradingViewThe LTC/USDT pair could now rise to the downtrend line. If the price turns down from this resistance, the bears will attempt to sink and sustain the pair below the $118.03 support. If they manage to do that, the descending triangle pattern will complete.This bearish setup could attract further selling and may result in a further decline to $70. This negative view will be invalidated if the bulls drive the price above the downtrend line. That will indicate strong buying at lower levels and the pair may then rally to the 50-day SMA ($215).The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.Market data is provided by HitBTC exchange.

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Bitcoin bounce from $28.8K activates century-old financial model's bullish thesis

A recent upswing in the price of Bitcoin (BTC) following a nail-biting price crash below $30,000 this Tuesday has activated a classic financial model’s bullish outlook on the cryptocurrency.Called the Wyckoff method — created by Richard Wyckoff in 1888 — the model attempts to navigate financial market trends based on the relationship between the supply and demand of assets. The method has two measurements: accumulation and distribution. In an Accumulation setup, an asset signals bottoming out following a sharper price decline. It eventually leads to the price rebounding to the upside. Meanwhile, the Distribution setup sees the asset topping out after a solid price moves uphill. After that, the price reverses direction to the downside. Each setup has five unique phases. For example, in Distribution, an asset goes through the following events across the said phases (in order): Preliminary Supply (PSY), Buying Climax (BC), Automatic Reaction (AR), Secondary Test, Sign of Weakness (SOW), Last Point of Supply (LPSY), and Upthrust After Distribution (UTAD).Wyckoff events and phases during distributionMeanwhile, in the Accumulation schematic, an asset logs the following events across its five phases (in order): Preliminary support (PS), Selling Climax (SC), Automatic Rally (AR), Secondary Test (ST), Last Point of Support (LPS), and Sign of Strength.Wyckoff events and phases during accumulation Wyckoff confirms Bitcoin accumulationComparing the Bitcoin recent price action and the events presented in the Wyckoff Accumulation schematic, it appears the cryptocurrency is grappling with its Last Point of Support of Phase C.Bitcoin phases imagined per Wyckoff Accumulation Schematic. Source: TradingView.comPhase A in the chart above shows exhaustion in the previous downside momentum at the Secondary Test (between $28.8K and $30K) and Selling Climax (approx $34K) levels. Up to this point, the supply was dominant as per the Wyckoff Method. An automatic rally (AR) approached in Phase B, led by both institutional demand for Bitcoin and short-covering. Later, the price repeatedly dipped towards secondary tests and bounced back after testing the Selling Climax horizontal line from Phase A.Now, the Bitcoin price has entered Phase C, leaving it to the “smart money” to decide whether the cryptocurrency is ready to go higher. An upside confirmation would come if the ongoing rebound extends above the SC-ST phase, accompanied by stronger volumes.Phase D and Phase E reflect an all-and-all recovery run towards $60,000.”It seems like a possibility,” said market analyst Kevin Swenson. “We just got the lower low at $28.8K … If this model plays out, we will now enter the final phase of the recovery back up.”In terms of the Wyckoff method, this $28.8K lower low is very similar to the $65K higher high. Both cause a maximum emotional effect on market participants.”Meanwhile, Bloomberg Intelligence’s senior commodity strategist, Mike McGlone, albeit not referring to the Wyckoff Method, noted that repeated bullish rejections near $30,000 are similar to how Bitcoin bounced from $4,000 in 2019-2020.Bitcoin bulls show resilience at $30,000. Source: Bloomberg Intelligence”Selling Bitcoin around good support & similar dips below most means as about $30K this year hasn’t ended well,” he added, “and if the key question this time around is whether it’s different, we see a more-enduring bull market.”The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Will regulation adapt to crypto, or crypto to regulation? Experts answer

Blockchain technology promises to provide humanity and freedom with the rise of Web 3.0, a truly decentralized internet. Some even argue that the significant rise of the decentralized finance (DeFi) sector has become an important symptom of the conceptual shift from centralized services to decentralized ones, with Web 3.0 being its cornerstone.  Moreover, some even compare the invention of blockchain technology to the revolution brought by the advent of the internet itself. Symbolically, the original source code for the World Wide Web, developed by British computer scientist Tim Berners-Lee, is set to be auctioned off at Sotheby’s on June 23 as a nonfungible token, or NFT. All three of them — NFTs, DeFi and Web 3.0 — are intertwined. But with that internet-blockchain comparison comes a crucial notion: Without proper regulation in the crypto and blockchain space, there will not be the same success in technological innovation as what we saw over the past 25 years, which changed the world as we know it.  It is now becoming obvious that a lack of regulation would harm crypto innovations. As the decentralized technology sector has grown significantly, the space has started to attract increasing attention from regulators globally, which are targeting stablecoins, DeFi, NFTs, crypto assets, smart contracts, unhosted wallets, central bank digital currencies and so on. Meanwhile, some experts such as Caitlin Long, the founder and CEO of Avanti Financial, for example, see the started “crypto regulatory crackdown” as a positive trend, which will only benefit innovators. And others propose “a right way to regulate crypto.” On the other hand, the current regulation is not suitable for crypto, and adjusting newly emerged decentralized technologies to it might ruin the core values of decentralization, bringing us back to where we started: with the centralized parties in control over the space. Is that the price we are willing to pay in order to become a regulated industry?  Related: Decentralization vs. centralization: Where does the future lie? Experts answer In order to find the right balance, the crypto space requires a much deeper and closer working relationship that would include both regulators and innovators. Only in a dialogue between crypto businesses and regulators, authorities and industry representatives, will it be possible to find the right way to regulate the emerging tech industry — through smart regulation — and the space that is promising to change our lives — a promise that was fulfilled by proper regulations for the internet at the turn of the last century. To find out what crypto and blockchain industry representatives think about this regulatory dilemma, Cointelegraph reached out to a number of them to ask for their opinions on the following question: Will crypto lose its core values on the way to being regulated, or will the regulation adapt to decentralized tech and its benefits for society?

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Bitcoin holds $34K as Bloomberg likens $30K support to $4K in 2020 BTC price crash

Bitcoin (BTC) maintained $34,000 support on Wednesday as a rebound from six-month lows showed surprising resilience.BTC/USD 1-hour candle chart (Bitstamp). Source: TradingViewBitcoin bulls see 2020 similaritiesData from Cointelegraph Markets Pro and TradingView showed BTC/USD stabilizing on Wednesday after a day of unnerving volatility.At the time of writing, Bitcoin was approaching $34,500 on the back of daily gains, which topped 15%.While the latest price action did not convince everyone that the bottom was in, it frames the dip to $28,600 as a capitulation event on the back of negative news from China similar to the $30,000 flash crash in May. For Mike McGlone, senior market strategist at Bloomberg Intelligence, there was little reason to reassess a long-term bullish view on Bitcoin. He argued that $30,000 was just like $4,000 after the 60% price crash of March 2020 — a “line in the sand.”“Selling Bitcoin around good support & similar dips below most means as about $30K this year hasn’t ended well, and if the key question this time around is whether it’s different, we see a more-enduring bull market,” he explained.BTC/USD $30,000 vs. $4,000 comparison. Source: Mike McGlone/TwitterWyckoff signals spook tradersAmong the more cautious voices, meanwhile, was popular trader Rekt Capital, who on Wednesday was keenly eyeing the potential for Bitcoin to fulfill a negative Wyckoff pattern to exit to the downside.“In sum, if BTC loses this current downtrend wedging structure… BTC will breakdown into Phase E of Wyckoff Distribution,” he warned. “If $BTC breaks out from here and rejects harshly from the red area above… Phase E could also lie ahead.”Bitcoin negative Wyckoff forecast chart. Source: Rekt Capital/TwitterChina’s crackdown on mining, the main impetus for current price weakness, has divided commentators.Related: Chinese Bitcoin miners ‘not even in the mood to drink anymore’In an interview with mainstream media, Saifedean Ammous, author of The Bitcoin Standard and its sequel, The Fiat Standard, argued that miners forced to relocate from China were selling BTC that they otherwise would have held, creating additional price pressure.He added that the coins involved may well have been hodled for a long period, increasing the bearish mood as monitors picked up movements of coins that had not moved for a noticeable length of time.

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Hodlers see opportunity in Bitcoin price crash, CoinShares exec says

The downward trend in Bitcoin’s (BTC) price following its April all-time high might be worrying for first-time investors. Still, CoinShares chief strategy officer Meltem Demirors believes that most of the long-time holders are not selling, and this is a correction to weed out panic sellers. Speaking to CNBC, Demirors underscored that Bitcoin is here to stay, and after 200 days of crypto market expansion, it’s normal to have a price drop. “You can’t have a number go up forever,” she added, stating:“What we’re seeing is a correction, a contraction, and a lot of what is getting shaken out is what we call the paper hands, the weak hands.”“Paper hands” is a popular market term to describe an investor who can’t endure high financial risk and starts selling as soon as the asset price begins to drop. It’s the opposite of “diamond hands,” which simply means a pressure-resistant holder.Reminding that the crypto market, excluding Bitcoin, is up 200% for the year, Demirors said that Bitcoin has always been a volatile asset class. “I’m not going anywhere even if we go to $20,000. Last March, we were at $3,000 for Bitcoin,” she said, adding that “we have to keep the context in mind.”She said that many retail investors who didn’t do their research are selling, while long-term holders continue to wait. “If we look at on-chain activity, wallets that have been holding for a long time have actually been using this opportunity to accumulate,” she added.Glassnode data confirms Demirors’ point. According to its data, Bitcoin addresses that do not sell the coins they accumulate have increased their holdings since April’s all-time highs.Related: Bitcoin drops below $30K to 6-month lows: Watch these next price support levelsDemirors said that she expects to see consolidation at the current price level with the uncertainty at the macro scale. “There’s a lot of uncertainty around policies. There’s also a lot of negative headlines,” she reasoned.Meanwhile, Bitcoin is heading for its worst quarter since the start of the 2018 bear trend, according to crypto data aggregator Skew. Data shows that Bitcoin is down nearly 46% for the quarter, the weakest quarter since Q1 2018.

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