Bitcoin Holds Above $20,000 After Week of Forced Crypto Selling

Following a tumultuous week in which Bitcoin fell below $20,000 for the first time since 2020, some market analysts are pointing to probable signals that prices have bottomed — at least for the time being.

Bitcoin climbed 1.6% in Asia on Tuesday, trading at $20,665 as of 8:42 a.m. in Tokyo. The MVIS Cryptocompare Digital Assets 100 index increased by 1.5%. So-called altcoins such as Solana and Polkadot grew in popularity.

According to Glassnode, realized losses on Bitcoin assets hit a new high of $7.3 billion last week.

The report said:

“With forced sellers appearing to drive much of the recent sell-side, the market might begin to eye whether signals of seller exhaustion are emerging over the coming weeks and months,”

According to a statement on Monday, Marcus Sotiriou, an analyst at GlobalBlock, cited to the Glassnode data to imply that “a macro bottom, or temporary bottom, could be imminent.” He claims that altcoins haven’t experienced the same “cascade in liquidations” as Bitcoin and Ether, which are largely utilized as collateral for leveraged bets.

With central banks throughout the world intent on draining liquidity to battle runaway inflation, any market recovery could be short.

The T3 Bitcoin Volatility Index, which measures the token’s predicted 30-day volatility, has risen to levels last seen in mid-May, when the TerraUSD stablecoin’s collapse rocked markets.

Feroze Medora, director of APAC trading at Cameron and Tyler Winklevoss’s Gemini crypto platform, said in a note on Monday:

“A toxic mix of bad news cycles and higher interest rates has hurt the crypto market and we can anticipate more volatility in the upcoming weeks,”

Since peaking near $69,000 in November, Bitcoin has gone through two “distinct capitulation phases,” according to Glassnode. The first was sparked by the collapse of the TerraUSD stablecoin in early May, and the second was sparked by “massive industry-wide deleveraging, both on and off-chain” over the previous week.

According to Chiente Hsu, chief executive officer of decentralized financial platform ALEX, current trading patterns in Bitcoin and Ether show that some significant crypto holders are “chasing liquidations to profit from forcing other participants out.”

The heavy demand on DeFi applications adds to the uncertainty. When pandemic-era stimulus fueled a record-breaking crypto boom, their attractiveness as a source of high payouts skyrocketed.

They are now being compelled to take unusual precautions in order to avoid a chain reaction of liquidations. Celsius Network Ltd., the embattled crypto lending platform, said on Monday that it needs additional time to reestablish its liquidity and operations after freezing deposits in June.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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