Bitcoin and the broader cryptocurrency market bottomed out at the end of April 22nd, and the Intensive Sales Price (BTC) fell below $ 48,000. This was a relief for quantitative analysts like PlanB, who were concerned that price growth was showing signs of being inorganic.
A variety of factors have been identified as causing the price decline, including a crowded futures market and heavy sales activity from small to medium-sized whales. Aside from whales’ activity in the crypto market, the most impactful development was a proposal by the government of US President Joe Biden to increase capital gains tax for individuals who earn more than $ 1 million a year.
Data from Cointelegraph Markets and TradingView show that a sharp sell-off on April 23 resulted in a break below the $ 50,000 support level for Bitcoin, bringing the price down to a low of $ 47,500 before some brave buyers arrived to push it back above 49,000 To raise USD.
The breakdown below $ 50,000 represents a 25% decrease from its recent all-time high. Bitcoin is now trading at the level last reached in early March.
Bitcoin inflows into exchanges preceded the downturn
When asked about the April 22 price action, Micah Spruill, Managing Partner and Chief Investment Officer at S2F Capital, stated that the sell-off “appears to be an attempt to bring the price below the all-important $ 50,000 level, where a significant number of put options would expire in the money. “
Spruill noted that “bearish net inflows from BTC transfers to exchanges” were the likely catalyst that “took us to the next level of support in the chain around $ 47,500,” and also highlighted the fact that “most of the coins Moved in the chain During this final sale, coins and not long-term holder coins were recently acquired. ”
According to Élie Le Rest, partner at digital asset management company ExoAlpha, the ability to maintain current price levels would “confirm the accumulation pattern of institutional investors at or below USD 50,000 and leave room for growth for Bitcoin in the coming weeks / months” .
Should the price continue to fall, Le Rest identified USD 43,000 as the next strong support level and emphasized the fact that altcoins really started to “bloom” when BTC last traded in this area in February.
Le Rest said that “a return to these levels could trigger a strong downtrend for the altcoin market as they would have lost all of their recent gains,” which could potentially lead to Bitcoin dominance rising above 60%.
Le rest said:
“In both cases, this type of market withdrawal is very healthy as it helps to reduce the debt of market participants and lays the foundation for more stable growth.”
Traders rush to the exits
To better understand the rapid sell-off in Bitcoin price, Jarvis Labs co-founder Ben Lilly offered an analogy alluding to vendors acting like passengers on a boat to describe what was happening as “spontaneous synchronization”.
“When a boat starts to tip over, some people lean into it first. The more it leans, the more people lean too. Then bam, there are tips … “
Lilly pointed out several ways traders were using to make money from this downturn, including “selling the altcoin euphoria” and making profit from futures carry trading. He also highlighted the fact that in these cases capital was used to sell short rather than buy.
As an indication of how quickly the market was selling and how far it surprised even institutional traders, Whalemap, an on-chain analytics firm, posted the following tweet highlighting the importance of the $ 55,000 level.
55k should have been the bottom. At that price, 263 thousand bitcoins flowed into the wallets of the whales. In the future, this could be a problem area for BTC. But let’s see what happens. We are currently supporting you. pic.twitter.com/Ooo20xlYzq
– Walkarte (@whale_map) April 23, 2021
What analysts think about buying BTC under $ 50,000, Whalemap published in the table below, saying the following:
“The hourly loss of movement is higher than the gains. Historically, this has been a good buying opportunity. “
The market is now eagerly awaiting the next big rise in Bitcoin to see if this is just an overdue correction that will result in a continuation of the bull market or the opening salvo of the next bear market cycle.
Altcoin prices are collapsing
Bitcoin’s drawdown hit the altcoin market particularly hard, causing double-digit losses for the majority of the top 100 tokens.
Ether (ETH), the tallest altcoin by market cap, has been beaten up, trading more than 12% off its April 22nd all-time high of $ 2,640 at the time of writing. Meanwhile, XRP and DOGE were the hardest hit tokens in the top 10, with their prices falling more than 20%.
Three notable exceptions to the current sell-off are Compounds COMP, WAVES and Heliums HNT, which managed to beat the sale by posting gains of 13%, 9% and 8% at the time of writing.
The total market cap for cryptocurrencies is now $ 1.862 trillion, and Bitcoin’s dominance rate is 50.7%.
The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph. Every step of investing and trading involves risk and you should conduct your own research when making a decision.