After what had been a very good week of trading, Bitcoin (BTC, Tech/Adoption Grade “A-”) took a spill over the weekend, falling from around $63,000 on Friday all the way to about $51,500 on Sunday.
• Bitcoin has bounced back to $56,000 from lows near $51,500 on Sunday.
• Binance Coin (BNB, Tech/Adoption Grade “C”) has seemingly bottomed out after its recent correction and will look to continue its push to new heights.
• Chainlink (LINK) is still holding its 21-day moving average after last week’s big gains.
Bolstered by the news of Coinbase Global Inc.’s (Nasdaq: COIN) direct listing, Bitcoin reached new highs above $64,000 last week. After the plummet to $51,500 on Sunday, it bounced back to around $56,000 as of midday Monday.
It’s impossible to pinpoint a single factor, but it looks like a large amount of leverage in the cryptocurrency market contributed to this mini-crash.
BTC has now fallen below its 21-day moving average, an indication that this mini-crash could turn into a longer correction. Holding current levels and establishing a base for recovery will be key this week. There’s some support volume around $56,000, though there’s much more around $50,000. On the upside, $60,000 is resistance.
Here’s BTC in U.S. dollar terms via Coinbase:
Binance Coin has had a wild 24 hours of trading. After bottoming at $420 yesterday, it spiked all the way to $540 earlier today, a gain of about 30%, before settling in near $490.
BNB has exploded since March 1, its parabolic run energized by crypto traders looking for assets with more upside than Bitcoin and/or Ethereum (ETH, Tech/Adoption Grade “A-”) offer at these stages of their respective development curves. All that’s left to wonder is how high it’ll go from here.
Here’s BNB in U.S. dollar terms via Binance:
Chainlink has been volatile lately. It traded at all-time highs just above $43 on Friday, eclipsed $44 on Saturday, slid to near $30 on Sunday, bounced back to $42 earlier Monday and is now trading in the $36 neighborhood.
On the tech front, last week, Chainlink released a new white paper on its vision of the future of oracle-enabled smart contracts.
As for market action, LINK is still trading above its 21-day moving average, an indication that the long-term trend remains in place. The decentralized oracle network has shown some serious signs of strength amid this volatility. If it can regain the $40 level, it might continue its blistering path to new highs.
Here’s LINK in U.S. dollar terms via Coinbase:
Notable News, Notes and Tweets
• Ripple’s (XRP, Tech/Adoption Grade “B-”) battle with the Securities and Exchange Commission (SEC) has taken an interesting turn.
• Pomp is the latest FinTwit celebrity to recruit people to Miami.
• Early-stage Coinbase investors saw some massive paper gains last week.
What’s Next
Cryptocurrency markets had been looking a bit overextended for a while now. As is the case with old-school financial markets, from time to time, excess has to be flushed from the system in order to cleanse it for a resumption of healthy, sustainable, long-term growth.
It being the case that an excess of leverage has been building in the cryptosystem, we wouldn’t be surprised to see the market go in either direction at this point.
On the downside, we could be looking at the $46,000 to $48,000 neighborhood as a bottom for Bitcoin. That would represent a retracement of approximately 30%. Indeed, we’ve been anticipating such a move for months now. It would create an excellent buying opportunity — a meaningful correction amid what looks to us like at least another year of bullish action for this market.
Now, if Bitcoin could break and hold above $60,000 for three days straight, we’d likely see it move to new highs in short time.
One thing we can absolutely confirm today is that we’re still in “altcoin season.” At the same time, we expect more volatility in the altcoin market, as altcoins will likely continue to outperform the King of Crypto in the weeks ahead. Any sustained bullish or sideways trading in Bitcoin would likely send altcoins to new highs.
Stay vigilant. And don’t get overleveraged.
Best,
Alex
