Bitcoin (BTC) starts a new week in a precarious position after experiencing its most extensive losses since November.
In a major comedown from ten-month highs, BTC/USD lost around 10% before the weekly candle finally closed.
At around $27,600, the culmination of a grim few days for long traders means that BTC/USD is now caught battling for last month’s support.
Market participants are in two minds as to how the situation might play out — some are betting on deeper downside, while others remain confident of retesting those multi-month highs.
Catalysts may come in the form of United States macroeconomic data releases later in the week, while markets are also gearing up for the next Federal Reserve interest rate decision.
With the recent correction taking some of the “greed” out of crypto sentiment, can the shock give way to more sustainable upside or is the bull market over, at least for now?
Cointelegraph takes a look at the data and opinions behind current BTC price action.
BTC price fights for support amid warning of “bigger corrective move”
It was a mercifully nonvolatile weekly close for Bitcoin, which at $27,600 nonetheless finished up $2,700 under its starting position.
Currently targeting $27,000, BTC/USD now faces a decision — sit near current support, also a focus in March, or break out.
“Spot premium back to the same levels it was at previously while trading at this price range. Funding rates slightly negative across the board. Nothing insane yet,” popular trader Daan Crypto Trades summarized on the day.
Fellow trader Crypto Tony maintained his target of $26,600, while Caleb Franzen, senior market analyst at Cubic Analytics, said that higher levels must return for bulls to gain the upper hand.
“Bitcoin has been unable to break and stay above $27,820 (green range), which is a key level I've been sharing,” he explained alongside a chart.
“For short-term momentum to shift in favor of the bulls, I think we need to see price get (and stay) above this range. It continues to act as resistance…”
The latest data from the Binance order book meanwhile showed resistance increasing at $28,000.
According to monitoring resource Material Indicators, this was an attempt to push spot prices lower in order to fill bids at more appealing levels.
On the more conservative side, trader Mark Cullen predicted that the worst was yet to come.
“A nice bear flag formed over the weekend, looking very corrective with volatility dropping while price increases & H4 bear divergences forming,” he tweeted on the day.
“I am looking for the range lows to get swept before Bitcoin has a bigger corrective move.”
PCE print due as markets "price in" new Fed rate hike
The week’s macro triggers come principally in the form of corporate earnings and economic data releases in the United State.
These will center on GDP and jobless claims on April 27, as well as the March print of the Personal Consumption Expenditures (PCE) Index a day later.
Corporate earnings will also continue, while looming on the horizon is the May meeting of the Federal Open Market Committee (FOMC) at which the Fed will decide on its next interest rate changes.
The strength, or otherwise, of intervening macro data prints influences that decision considerably, Chair Jerome Powell has confirmed, with markets thus in “wait and see” mode until the last of the figures are in.
According to CME Group’s FedWatch Tool, however, consensus is now overwhelmingly in favor of yet another rate hike, further pressuring U.S. banks and the wider financial system.
The chances of another 0.25% hike currently stand at 85%.
“Expectations for a +25bps hike in the next FOMC meeting are high, but not reliable due to fluctuations,” investor Crypto Awakenings wrote in part of commentary on the day.
“A pause announcement by Powell can trigger a break above $30k for Bitcoin. If a hike is announced, it’s likely already priced in by the market and confirms a ‘sell in May and go away’ won’t happen in 2023. The pause may happen in May or July, with May being more probable.”
Trader Ash WSB likewise drew attention to the fact that the May hike was likely “priced in” by the market, suggesting less chance of a surprise if the Fed follows through.
“Technically I think we'll be having the classic Monday drop and then we'll reverse,” Michaël van de Poppe, founder and CEO of trading firm Eight, added in part of his own analysis including shorter timeframes.
“GDP & FED coming up. Markets are pricing in reality in which 25bps is a likelihood. Waiting for a clear reclaim of $27,800 or bull. divs in $26,800 area for longs on Bitcoin.”
Panicking Bitcoin traders realizing losses
It is no secret that the past week’s BTC price action spooked many a less experienced trader, and data proves it.
According to figures from on-chain analytics firm Glassnode, younger coins being sent to exchanges at a loss increased sharply last week.
Glassnode commonly differentiates the BTC supply by age, with “long-term holders” (LTHs) used to describe wallets hosting coins for 155 days or more. Less than that, and they become “short-term holders” (STHs) — frequently corresponding to the more speculative end of the Bitcoin investor base.
The data shows that since around April 16, STH coins — those which last moved within the 155 days prior — were increasingly moved to exchanges at a lower price than that at which they moved in their previous transaction.
These STH realized losses suggest increasing panic, LTH realized losses also increasing among those moving funds to exchanges.
Separate data from Coinglass puts weekly inflows to largest exchange Binance at 21,000 BTC.
Looking at the ratio of transaction volume profit and loss across both Bitcoin and Ether (ETH), meanwhile, research firm Santiment notes some curious behavior.
Recent days have seen an inordinate amount of loss-making volume versus volume in profit, despite the relatively shallow price retracement of both assets.
“With many traders FOMO'ing in Bitcoin above $30k and Ethereum above $2k this past week, loss transactions have mounted as markets pulled back,” it explained over the weekend.
“Since Thursday, traders are moving coins below prices they obtained them at 3 times as often as above.”
Analyst: "Smart money is done accumulating BTC"
Should the above phenomenon point to a shakeout of speculative traders, it may have come right on time — at least by historical standards.
In his latest update on market strength, popular Bitcoin analyst Moustache revealed that behind the scenes, the current Bitcoin bull run is playing out just like all others before it.
Using the qualitative quantitative estimation (QQE) — a form of the relative strength index (RSI) — Moustache suggested that Bitcoin was now at a pivotal point.
“Smart money,” he argued, has already bought the dip, and is now waiting for the real upside to begin.
“Smart money is done accumulating BTC. I told you a few weeks ago that once QQE >0 = Accumulation ends,” he declared.
“We always saw a strong bull run afterwards.”
Moustache added that the past week’s losses were apt to give bears a false sense of security.
“We're not the same. It’s buy the dip time,” he concluded.
Crypto sentiment cools to "neutral"
One potential bonus attached to the latest BTC price drop concerns wider crypto market sentiment.
According to the Crypto Fear & Greed Index, the mood among market participants is rapidly trending back to more reasonable levels.
Previously, Fear & Greed was at its highest levels since November 2021 and Bitcoin’s latest all-time highs. This, some warned at the time, might be unsustainable and lead to a swift market correction as traders became complacent and placed bets on upside continuing unchallenged.
With the comedown in full swing, the Index abandoned its “fear” zone altogether, switching to “neutral” and a score of 53/100 as of April 24.
That score is around the lowest — or least “greedy” — since mid-March.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.