Bitcoin,  Markets Report

Markets Report: Bitcoin sheds 4% as bulls give way to new correction

A comedown from the weekend’s all-time high accelerates on Monday, with $50,000 about to be tested as support for the first time

Bitcoin is correcting again as the latest phase in its epic bull run looks ripe for some disruption. 

After the weekend produced a fresh all-time high of $58,314 for BTC/USD, Monday is proving stubborn, with Bitcoin briefly coming down over $10,000 in 24 hours before reversing.

Modern Consensus takes a look at what the next few days might have in store for hodlers of both Bitcoin and altcoins. We also publish a weekly markets summary every Friday, the latest edition of which you may find here

Bitcoin tests “critical” $52,000 level

With last week characterized by solid performance for Bitcoin, anticipation is building of when and how the next consolidatory period would take place.

Throughout 2021, Bitcoin’s bull run has been punctuated by periods of retracement, consolidation and sideways trading. The run to $42,000 several weeks ago was a perfect example, leading to multiple retests of $30,000 support and rangebound behavior between there and the high.

As such, with $60,000 almost hitting, analysts are considering the odds of a further cooling-off period. 

For popular trader Michaël van de Poppe, this “cyclical” market pattern lends weight to that forecast, as in many years Bitcoin and altcoins saw corrective moves in March before continuing higher thereafter.

“We do know that the 21-week moving average is currently at $27,000, so we are most likely not going to hit that low at $30,000 once again,” he explained about the odds of repeating the previous retests.

“We also know that there are some levels that we have to watch on the daily timeframe and the critical one we have to watch in the short-term is basically this area… we have around $52,000.”

BTC/USD recovers above an essential support level. Source: TradingView

Should that level hold, the option for Bitcoin to reattack $60,000 and continue to a Fibonacci extension level at $63,000 remains open, he said.

At press time, BTC/USD was highly volatile, hovering above that critical level after seeing snap lows of $47,400.

Fellow trader Scott Melker eyed signs that a sell-off was occurring on exchange Gemini, which had seen a spike in inflows of 33,800 BTC. 

“Yesterday, before the recent dip in the price of #Bitcoin, we spotted an increase in the inflows of BTC into exchanges, the majority going to Gemini,” Into the Block, the data science company which highlighted the activity, added in comments.

Gemini saw the lion’s share of Bitcoin exchange inflows on Sunday. (Photo: Into The Block/ Twitter)

Altseason delayed

With Bitcoin under pressure, altcoins have nonetheless yet to put in a reactionary uptick. This also corresponds to historical behavior, with Van de Poppe and others noting that altcoins generally do not perform well as soon as Bitcoin corrects.

Only after a period of sideways action on BTC/USD do altcoins begin to rally, something which could well play out once again in the coming few months.

“…I can’t predict the top, but the likelihood of some kind of corrective move is still there, and therefore I position myself different in a way that I don’t want to be exposed towards altcoins fully at this point,” he continued. 

Action across the top ten cryptocurrencies by market cap was indeed mixed on Monday, with XRP forming an outlier with 15% gains as other tokens traded sideways or lost against USD.

Bitcoin dominance thus increased modestly towards 61.5% of the total cryptocurrency market cap.

All hail the Bitcoin ETF

Beyond the short term, however, nothing had really changed for analysts—the sheer volume of institutional involvement was more than enough proof of the bull market’s longevity. 

After the first Bitcoin exchange-traded fund (ETF) launched in Canada last week, the amount of interest took many by surprise and indicates the true appetite for Bitcoin exposure among the financial establishment. 

In its first two days alone, the Purpose Investments Bitcoin ETF gained $421 million in assets under management.

With Morgan Stanley among others also applying to launch an ETF, commentators argue that the latest “wall” of money to hit the market will come from this long-awaited addition to the industry.

“Between this offering and the Coinbase upcoming IPO/direct listing, crypto exposure is now coming full force to the public markets,” John Todaro, head of business development at institutional trading firm TradeBlock, tweeted last week. 

Various providers have attempted to woo U.S. regulators into allowing an ETF, but since 2016, all have been met with reservations about whether the market was ready for such an instrument. 

Amid signs that the status quo is changing, those jurisdictions that continue to take a hard line on crypto more broadly—notably India—saw little sympathy. 

“If your Government tries to ban #Bitcoin, they are screaming at you as to why you might need it,” author and entrepreneur Jeff Booth said on Sunday. 

“All you need to do is listen.”

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Anthony Bevan is a journalist focusing on disruptive finance and cryptocurrency, along with the changing face of the market as Bitcoin gains mainstream adoption. Journalists covering cryptocurrency for Modern Consensus May hold positions in some of the currencies they write about.