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Analysts' Insights

Analysts' Insights

As predicted, crypto is selling off. What's next?

  1. While prices have now corrected from 30,350 when he sent out our note to now 28,870 (-5%) and Ethereum from 2,127 to 1,946 (-9%), we would remain cautious and patient...
  2. On Monday, we warned that traders should NOW take some profits as "the crypto market is showing exuberant signs".
  3. Our own Greed & Fear indices had climbed to 95% and 98% for Bitcoin and Ethereum, respectively (range 0-100%). While still high, they have now dropped to 75% and 86%.
  4. Based on the historical track record of our indicator, a reading above 90% has signaled caution with the risk of a correction elevated while a reading below 10% has offered buying opportunities.
  5. The funding rate was excessively high for even large-cap names such as Bitcoin and Ethereum and signaled to us that a lot of short-term traders went very long and prices were at risk of correcting lower.
  6. Binance had also announced that Ethereum withdrawals would only start from April 19 onward (Wednesday) and this date put the market at risk of a larger sell-off.
  7. Shortly ahead of the planned time for Binance ETH 2.0 withdrawals (bETH), prices fell through the support level at 2,070.
  8. This sets up the market to retest the key breakout levels of 1,900 (for Ethereum) and 28,000 (for Bitcoin).
  9. But on Monday, we also warned that interest rates have started to climb back up and this would be a negative sign.
  10. Indeed, we have seen UK inflation surprising on the upside and the move in bond yields needs to be watched. If 10yr US yields are below 3.50% AND if Bitcoin is near to 28,000 and Ethereum around 1,900, then we would buy again.

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