Sea of Red

Chart of the Day

The crypto space is currently bathing in a sea of red. The early hours of Friday saw most top cryptocurrencies by market cap nosediving by 8-10% after failing to clear their respective upside resistances. Once key psychological levels were breached, neither technical support levels nor on-chain price walls could do much to arrest the downward spiral. For instance, BTC, the number one cryptocurrency by market cap, plunged to a local low near the $38.2k level within a matter of mere hours. ETH also saw a heavy downside correction to test its support near the $2,800 level that it is currently trading at (as of the time of writing). There are still some silver linings though. If BTC can manage to establish a stronger foothold near the $39.2k support zone, its price is still likely to rebound to the $40.5k level even through the souring market sentiments.

If BTC is unable to do so, however, the journey south through the wasteland of scattered on-chain price walls would be a long and arduous one. With this latest dip in the price of BTC, the percentage of BTC in profit has also fallen to levels that were only last seen all the way back in July 2021. This indicates that more than 30% of the BTC supply that have changed hands since July 2021 is now holding onto unrealized losses. If historical patterns are anything to go by, whenever the percentage of BTC supply in profit drops like that, a mid-term bottom is usually formed. It is not just the majors that are bleeding, most altcoins are too. For example, many (recently) top-performing L1 tokens like SOL and ADA ended up shedding at least 10% of their values in the past few hours. Where the overall crypto market will go from here remains largely to be seen, but the next few days could be very crucial in deciding its mid-term fate indeed.