Bitcoin spot prices are falling as investors are distracted from other market opportunities. This includes the DeFi (Decentral Finance) ecosystem, which hit a record on Tuesday.
Bitcoin (BTC) is trading around $ 31,600 as of 9:00 PM UTC (4:00 PM ET). 1.2% decrease in the last 24 hours.
Bitcoin’s 24-hour range: $ 29,298 to $ 32,939 (CoinDesk 20)
BTC above the 10-hour moving average but below the 50-hour moving average on the hourly chart, a sideways signal for market technicians.
The price of Bitcoin lost ground for the second year in a row on Wednesday. The world’s oldest cryptocurrency fell to $ 29,298 around 15:00 UTC (10 a.m. ET), according to CoinDesk 20.
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It was the first time since January 21 that Bitcoin has traded below $ 30,000. On that day, prices dropped to $ 28,845 before hovering in a range of $ 30,000 to $ 35,000 by Wednesday.
“Technically, BTC is still in a descending triangle, which is a continuation pattern and has lower highs and lows with a minimum price of $ 29,000,” Cindy Leow, portfolio manager at multi-strategy trading firm 256 Capital Partners told CoinDesk. “But if we close down below [$29,000], could see another spike around the middle of $ 20,000. “
Traders appear to be distracted by other opportunities like GameStop (NYSE: GME) and fiat currencies in the forex market, noted Jason Lau, chief operating officer of the San Francisco-based exchange OKCoin. “Attention is likely elsewhere, especially the GME drama and dollar strength,” Lau said.
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The US dollar index (DXY), a measure of the greenback compared to a basket of other national currencies, is in the green of 0.52% at the time of going to press after a volatile day and has increased by over 7% in the past year. 3% down.
The story goes on
“The short US dollar trade has been going on since the pandemic began and is one of the most crowded stores out there,” said Chad Steinglass, director of trading at Crosstower, a digital asset company. “I think that part of this jockey for the position is putting pressure on both BTC and ETH, although the impact on BTC, which has shown relative weakness compared to its little brother in recent weeks, is increasing are felt. “
On the institutional side, fictional activity related to LMAX, known for spot trading by larger order players, has declined since the last price crossover of $ 30,000 on January 20th. However, according to the closing data of the CoinDesk subsidiary TradeBlock on Tuesday, it was in an upward trend. It is worth noting that the nominal value, which represents the total value of the positions, seems to have risen well over the last month with price gains.
“Bitcoin has held up so far, but a decisive interruption could trigger further price declines,” said Denis Vinokourov, head of research for digital assets at prime broker Bequant. “This despite the positive dynamism of institutional investors like BlackRock [BLK], listed marathon [MARA] and foundation fund of the university. “
After the 90-day correlation coefficient between Bitcoin and ether fell to an annual low of 0.55 on January 4th, it rose again to 0.65 (as of Tuesday).
Peter Chan, Lead Trader at OneBit Quant, expects the long-term correlation between BTC and ETH to get closer to 1, which is the strongest correlation number between assets. “In the macro view, there has always been a strong correlation between BTC and ETH,” said Chan. “In this case there is a medium reversal possibility – for example short ETH and long BTC.”
The value set in DeFi increased by over 2,900% in the past year
The second largest cryptocurrency by market cap, Ether (ETH), fell around $ 1,288 on Wednesday and fell 3.9% in 24 hours from 9:00 PM UTC (4:00 PM ET).
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The total value of decentralized funding (DeFi), which operates primarily on the Ethereum network, was $ 26 billion for the first time on Tuesday. It’s a 30-fold jump over the past year as on January 27, 2020, the amount “locked” in DeFi was tiny compared to $ 850 million.
256 Capital’s Leow suggests an overheated market as the locked DeFi value hits new highs as traders switch to lesser-known tokens.
“Traders are already heavily indebted in DeFi Perpetuals due to the immense upward volatility earlier this month,” noted Leow. “DeFi / Alts held up well against BTC for now, but we could easily see a reversal. The trend is already showing potential downward movements. “
Digital assets on CoinDesk 20 are mostly red Wednesday. Notable Winners as of 9:00 PM UTC (4:00 PM ET):
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Oil was down 0.18%. Price per barrel of West Texas Intermediate Crude: $ 52.64.
Gold was down 0.46% and was trading at $ 1,841 at press time.