Cryptocurrencies erased much of the bullish momentum at the end of the week as US megatechs reported weak financial results that contributed to the index’s pullback. At the same time, record amounts of bitcoins are being withdrawn from the balance sheets of cryptocurrency exchanges:
- Historically, the phenomenon of Bitcoin disappearing from exchanges has been a positive harbinger, signaling a reluctance to sell by “whales” pulling the tokens to external wallets. Did buyers really believe in the end of Bitcoin?
A record 55,000 BTC, worth about $1.1 billion, was withdrawn from the world’s largest cryptocurrency exchange, Binance. The amount represents the largest outflow in the history of the exchange. The size of the outflows surpassed the June low, when bitcoin was at $17,600, and the March 2020 crash. Source: CryptoQuant
The magnitude of Bitcoin outflows from cryptocurrency exchanges did not apply only to Binance, which may just be a “false signal” of whale movement. Average outflows from all cryptocurrency exchanges on October 25 and 26 approached June’s peak of nearly 23,000 BTC. Bitcoin broke out of the consolidation, similar to the bullish move of November 2020. The total amount of BTC leaving the exchange in the last few days is now approaching 71,600 BTC, with over 94,000 BTC liquidated from the FX derivatives balance. Such magnitude of liquidation of the BTC contract in the past heralded a decline in supply pressure. Source: CryptoQuant
- The cryptocurrency market is still uncertain about the future movement of cryptocurrencies in the face of a weak earnings season for technology companies in the United States and the Fed’s upcoming interest rate decision, which may increase. again burying the market’s hopes for a quick turnaround. Some cryptocurrency analysts are pointing out that the observed breakout was a “fake-out” and markets could be “punished” again by the Federal Reserve’s dovish narrative;
- However, the hope for a pivot is real in the long run. Wall Street has been told a “benign outlook” by analysts at the BlackRock fund, who reportedly noted Jerome Powell’s “dovish tone” from Wednesday’s upcoming meeting and expect lower rate hikes from December;
Ethereum is defending around $1,490, while Bitcoin is trying to maintain the psychological threshold of $20,000. The worst performers were altcoins, some of which saw declines of 3% and 4% ahead of the weekend.
Graph Bitcoin, the interval D1. The price of the largest cryptocurrency has been moving in a descending triangle shape. Bitcoin surprised the bears with a positive reaction, however, it is still too early to trumpet a change in trend. The 50 moving average (black line) has risen slightly, but the intersection with the 200 SMA (in red) is still far away. If the averages maintain current momentum, a crossover could occur around $22,500, signaling a possible trend reversal in an uptrend following a golden cross. Historically, trend changes for bitcoin have always been accompanied by a crossover of these two moving averages. Key support is around $20,000 and levels at $19,600 where the SMA50 is located. A drop below them could signal strong supply pressure and “expose” a possible false breakout. Source: xStation5
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