After "Waterloo", where will the cryptocurrency go?

December. 08,2021

Over the past three days, cryptocurrencies have reappeared in the roller coaster market. On the evening of Saturday (December 4) Eastern time, Bitcoin fell by more than 20% in less than 24 hours, hitting the lowest $42,000 mark, a new low since September, and at least 400,000 people broke their positions. However, with the emergence of a wave of buyers who bought on dips, cryptocurrencies made up for some of the decline.


UBS strategist Moritz Diller wrote when commenting on the flash crash of major cryptocurrencies that in the past two weeks, under the test of the new strain of Omi Keron, the shortcomings of cryptocurrencies have been highlighted, and investors have begun to weigh their long-term demand for cryptocurrencies. As well as the impact of tightening regulations in the field of confidential currencies, this response has intensified as the market has shown a decline in risk appetite (especially related to inflation).


But the bargain-hunting mentality soon drove retail buyers to start buying Bitcoin and Ether, mainly at the expense of tokens with higher leverage in the near future, and the anticipation that the epidemic might cause some countries to re-block them. They are even more bold.


According to UBS's analysis of the data on the Glassnode chain, retail investors and whales are buying at the bottom, while mid-sized investors are actively shorting. This may lay the foundation for the next round of short squeeze.


UBS also pointed out that Bitcoin's Realized Price (Realized Price) distribution map strengthened the 55000-65000 resistance zone. It is reported that the "realized price" refers to the "realized market value" of the token divided by the current supply, and the "realized market value" is the market value calculated by adding up the market price of the token when it moved on the chain for the last time.


Miller Tabak strategist Matt Maley believes that the sharp drop in Bitcoin was caused by individual investors being liquidated. After the sharp drop, the price of Bitcoin may be hovering in a narrow range.


IDX Digital Assets Chief Information Officer Ben McMillan commented on the matter, saying that $50,000 will be a key psychological level. By observing whether Bitcoin can quickly rise to the $50,000 area, the Bitcoin bulls will decide whether to hold .


Armando Aguilar, vice president of digital asset strategy at Fundstrat Global Advisors, pointed out that traders should pay close attention to the resistance level of US$52,000 to US$53,000. Failure to break through the above resistance may lead to overreaction by the market. Bitcoin may retest the mid-term level of US$40,000.


Ether once rebounded to near all-time highs after the plunge, but then fell sharply. UBS explained the reasons why bears prevented Ethereum from breaking through the all-time high of $5,000. The bank pointed out that the Ether options expiring in March 2022 are mainly dominated by 15k options worth about 400 million U.S. dollars.


"This situation suggests that the acceleration of Ethereum above all-time highs may cause a gamma squeeze. Conversely, if the price stagnates or declines, given the insignificant unconfirmed transaction volume by the end of the year, the price of Ethereum may fall further."


The financial blog Zero Hedging pointed out that this means to a certain extent that the market may witness Ether reaching around US$5,000, and only if the bears finally allow this to happen, Ether is expected to rise to US$15,000. But at present, it seems that it is still far away.