Market Overview
The crypto market capitalisation fell from $2.12T to $2.02T before rebounding to $2.06T, where it had stabilised at the time of writing as active trading began in Europe. Selling pressure intensified after a fresh downward surge in stock indices. This morning, cryptocurrencies again appeared stable or rebounding, but these sentiments will only be tested once active US trading begins. Over the past 24 hours, the top performers among the most liquid coins were AAVE (+5.6%), Solana (+0.7%) and Theta Network (+0.1%). Lagging behind were Algorand (-6.7%), Polkadot (-6.2%) and NEAR Protocol (-6.1%).
Bitcoin approached $58K at its lows late Thursday and early Friday, but in both cases, aggressive buying quickly pushed it back into the $60K range. This pattern resembles margin position liquidations during downtrend spikes, followed by strong buying on pending orders during the recovery. Given deteriorating sentiment among institutional investors and their ability to quickly divest from cryptocurrencies to stabilise their balance sheets, it is worth preparing for continued pressure and periodic sell-off spikes by leveraged traders.
News Background
Bitcoin plummeted to $58K amid a surge in aggressive selling on Binance, according to analyst Amr Taa. His data shows that spot market sales volume reached nearly $4 billion in two hours.
Bitcoin’s sharp fall coincided with the opening of the US market and a further deviation from par value of Strategy’s STRC preference shares. Concerns are mounting about Strategy’s financial health, as it lacks sufficient dollar reserves to pay dividends and reduce its debt burden, potentially prompting the sale of part of its BTC holdings.
Technical analysts are highlighting the emergence of a ‘head and shoulders’ pattern on the monthly chart for Strategy’s ordinary shares (MSTR), which could lead to an 80 per cent fall in the share price. The pattern is reminiscent of the dot-com bubble era, when MSTR shares formed a similar pattern and subsequently lost more than 99% of their value over the following two years.
Major players are accumulating Bitcoin at record rates against a backdrop of panic selling by retail investors, and the psychological divide between the two groups is widening to extreme levels, CryptoQuant notes.
The FxPro Analyst Team