"Weak longs" could cause the price of the Bitcoin market to drop, but the ether trapped in DeFi is on the upswing again.
- Bitcoin (BTC) starts trading at $ 19,067 as of 9:00 PM UTC (4:00 PM ET). 0.68% decrease in the last 24 hours.
- Bitcoin's 24-hour range: $ 18,923 to $ 19,433 (CoinDesk 20)
- BTC below its 10-day and 50-day moving averages, a bearish signal for market technicians.
Bitcoin trading on Bitstamp since December 4th.
A fairly tepid market on Monday opened the week, holding Bitcoin price in a range between $ 19,200 and $ 19,400 until traders hit the sell button around 6:00 PM UTC (1:00 PM ET). At that point, the price per 1 BTC was $ 18,923 based on CoinDesk 20 data and at the time of going to press it was $ 19,067.
"The market has come a long way in a relatively short time," said Rupert Douglas, director of institutional sales for Brokerage Koine. "Bigger picture, the market is on a higher course, but I expect lower prices first, perhaps to around $ 13,700, to eventually wash out the weak longs."
"Weak longings" will certainly be shaken out. In the past three days, sales liquidations of over $ 16M have been placed on Derivatives BitMEX, representing 72% of the total $ 22M automated margin calls over the period.
Much like a margin call, BitMEX will "sell liquidation" when prices fall, forcing leveraged longs to close their position.
While BitMEX's influence has actually waned over the course of 2020 due to regulatory issues, stock market sale liquidations are still helping to bolster Douglas's market thesis.
Bitcoin liquidations on crypto derivatives exchange BitMEX.
"There is a slack in the entire market," said Constantin Kogan, partner at the crypto investment firm Wave Financial and mega-bull for Bitcoin. "MicroStrategy has invested an additional $ 50 million in Bitcoin, which corresponds to a rate of over $ 19,000. So the mood remains positive."
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"Bitcoin is consolidating under its all-time high resistance, compressing volatility to pre-uptrend levels," said Cindy Leow, portfolio manager at multi-strategy crypto firm 256 Capital. Indeed, after a steady uptrend, volatility will decrease slightly.
The historic 30-day Bitcoin experienced volatility in 2020.
Source: Shuai Hao / CoinDesk Research
"We're seeing a return to the reversal with Bitcoin steadily trading between $ 17,000 and $ 20,000," added Leow. The last time Bitcoin traded at $ 17,000 was on November 17th, according to CoinDesk 20 data.
Historical Bitcoin price for the past three months.
Source: CoinDesk 20
Paying out winning positions was the preferred portrayal of analysts on Friday, and Leow agrees too.
"We remain cautious in the short term, largely due to possible year-end outflows and seasonal factors," she said. "We expect strong profit-taking from the liquidation of marked books and positions."
Some rotation into other crypto assets, colloquially known as "alts," and particularly in the Ethereum ecosystem, also appears to be a trend, Leow said. "A neutral scenario for the rest of the year is that we stay in this range while the profits from BTC are converted into alts."
The ETH once again kept DeFi on an upward trend
The second largest cryptocurrency by market cap, Ether (ETH), fell on Monday, trading at $ 586 and falling 1.5% in 24 hours from 9:00 PM UTC (4:00 PM ET).
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The amount of ether "locked up" in the DeFi (decentralized funding) is now over 7 million ETH, which at press time is $ 4.1 billion. It's an uptrend in December after a November when the Total Locked Out Value (TVL) fell to just 6.6 million ethers.
All-time aether included in DeFi.
Source: DeFi Pulse
Analysts say market momentum is at play as traders have clearly spun the airwaves out of DeFi but now appear to be getting back on track.
"One factor that contributes to this may simply be that BTC outperformed ETH in November," said Jake Brukhman, CEO of investment firm CoinFund.
256 Capital's Leow also noted that DeFi excitement could be on the upswing again. "While Bitcoin is only just below its all-time highs, the DeFi blue chip tokens are rebounding again due to the Eth 2.0 announcements and the general market excitement surrounding DeFi partnerships," Leow told CoinDesk.
The digital assets of CoinDesk 20 are mixed on Mondays, mostly red. Notable Winners as of 9:00 PM UTC (4:00 PM ET):
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- The oil decreased by 0.90%. Price per barrel of West Texas Intermediate Crude: $ 45.70.
- Gold was in the green at 1.3% and at $ 1,863 at press time.
- The US 10-year Treasury yield fell to 0.934 on Monday and was in the red by 3.4%.