The bottom collapsed for the price of bitcoin early Friday night through Saturday, with the price losing over $ 10,000 in less than three hours, before obviously rebounding, at least partially.
What then happened? Bad news causing panic? Network fraud? Nothing of that. If history doesn’t quite repeat itself, it certainly rhymes. As we had already experienced in April and then in September this year, it was a cascade of liquidations in a temporary environment of low liquidity that led to this fall.
Let us clarify the subject. The stock market was down on Friday following the Fed’s comments about inflation and renewed fears about the Omicron variant, a first case having been officially spotted in the United States. Bitcoin has shown itself to be correlated with the stock market throughout that day, arguably acting as a risk asset rather than a hedge against inflation. The price went from around $ 57,000 to its support between $ 53,000 and $ 54,000.
If the price remained in this zone for a few hours when the markets closed, it was at the end of the evening, Eastern time, that the real bearish cascade began. This is a consequence of different elements coming together at the same time. The trigger was without a doubt the typical low liquidity conditions both on weekends and time of day. In other words, the order bookwas very thin on trade, so few sales were enough to cause large price variations. What followed was the result of all the long margin positions accumulated since the fall. In terms that sound possibly weird, we could say that when the market wants to go down, it doesn’t always want to go down as much as it actually does. The reason is the cascade of margin calls, forcing the closure of long positions with forced sales at market prices, already low if they create that same margin call. 100M $ of positions were suddenly liquidated in less than ten minutes. Once the storm had completely passed, 2.5 billion dollars in positions were closed in this way. In short, a cleaning of margin positions like air after a strong storm.
Note that a liquidation of similar magnitude took place in September, when it had reached $ 10 billion in April. In short, we are far from being in uncharted territory.
We mentioned two weeks ago that the juries were under advisement in the trial between the estate of Dave Kleiman and Craig Wright, the one who proclaims himself to be Satoshi Nakamoto. At the center of the dispute, the fate of a wallet of one million BTCs. A verdict was rendered on Monday. It is rare that being ordered to pay $ 100M can be seen as a victory, yet these are the shoes Wright is in today. In their verdict, the juries ultimately concluded that Wright was not responsible for any of the charges except that of conversion, defined as “the conversion of the property of others for his own use”. The estate claimed roughly $ 170 billion in damages – well in excess of the actual value of the bitcoins at stake,
The Kleiman estate also rejoiced despite the setback. It’s a safe bet that she didn’t expect to receive billions of dollars no matter the verdict, and that the $ 100M is a nice consolation prize. Wright says he won’t appeal. If so, it will bring to an end a long legal chapter which has not produced clear answers as to the identity of Satoshi Nakamoto. On the side of investor interest, however, this takes the uncertainty out of the potential move and required sell-off of a gigantic bitcoin wallet. At this level, it is therefore the status quo.
The growing popularity of non-fungible tokens and their integration into the world of video games has just taken a new step. Indeed, the giant Ubisoft becomes the first major company in the industry to implement NFT objects in its games, starting with Tom Clancy’s Ghost Recon Breakpoint . Ubisoft was already the first video game publisher to take an interest in the blockchain space, experimenting with cryptocurrency game prototypes and supporting mid-market startups in recent years. Today, it is stepping up a gear, unveiling Ubisoft Quartz, a platform that allows players to earn and buy in-game items that are symbolized by NFTs on the Tezos channel.
Will the Metaverse be centralized or decentralized? This question, which may seem straight out of a science fiction film, is nevertheless very tangible at present with the efforts of Facebook, which has just become Meta, to retain its status as a giant in order to build this virtual universe. It is in this vein that the company announced last week that it was lifting the ban on most cryptocurrency-related advertising on the site. “We are doing this because the cryptocurrency landscape has continued to mature and stabilize in recent years and has seen more government regulations that set clearer rules for their industry,” the company said in a statement. Regardless of the honesty of the statement or the company in general,
Note that a new update will be integrated into the Ethereum network this week. Contrary to the importance of the London Hard Fork a few months ago, the Arrow Glacier update is secondary and has only one goal, which is to delay the placement of the “difficulty bomb”. It consequently gives developers more time to switch to the Ethereum 2.0 network with its proof-of-stake consensus mode . Without it, the current network could become less usable.
On the market side, note that the CME group has finally launched its micro Ether futures contracts. In an announcement made on Monday, the institution said it had launched a Micro Ether (ETH) futures contract in the size of 0.1 ETH, offering institutional and individual traders another product for exposure to the. Ether. The cash-settled micro ETH derivative offering is traded under the Globex code METZ1 and joins the crypto derivatives of the exchange including micro Bitcoin futures (BTC), Bitcoin futures, options on futures contracts. Bitcoin futures and Ether futures.
Ethereum has also continued to outperform bitcoin this week. Aggregate open interest across trading in the options market for the asset has hit a record high, suggesting that many speculators are positioning themselves for a major bullish move hoped for for the 2 nd largest cryptocurrency. The positioning of the Rivemont crypto fund also continues to move in this direction. In a December 3 tweet, this analyst’s popular account bolstered bullish predictions for Ether, even suggesting that the ETH / BTC ratio is poised to eclipse its already strong performance with a vertical move.
“I’ve been waiting and publicly plotting long-term ETH / BTC charts for years, and now we’re finally here,” he wrote alongside a predictive chart. “ETH is about to start going into parabolic mode. You just have to wait and see how crazy things are about to get. ”
Bitcoin’s return above the $ 50,000 mark on Tuesday was undoubtedly seen as a strong buy signal by the holder of one of the largest wallets. After buying frequently since BTC / USD hit an all-time high of $ 69,000 last month, the wallet holder has upped the ante this week with a one-time buy of 2,700 BTC – bringing its total to 118 017 BTC. As the observer “venturefounder” mentions via twitter, “this is officially the largest number of bitcoins ever held in this wallet: 118,017 BTC In total the whale has invested $ 2.5 billion to buy BTC with a average cost of $ 21,160 per BTC. “
Technically speaking, if the local supports have been lost during the week, the longer term ones demonstrating the overall health of the asset remain intact. The price is at an old resistance zone which is currently serving as support which hopefully could become the return level of an uptrend. The large 200-day moving average, currently around $ 46,500, provides an additional level of support. The price never stayed long in the current price channel. The next direction could therefore be crucial for the future. We are looking at the $ 46,000 area downwards, while a day north of $ 53,000 would need to be closed in order to re-paint a bullish picture in the near term.
Bitcoin reserves on exchanges are at a low that has not been visited for three years.