Still grappling with the fallout, the largest cryptocurrency remains significantly vulnerable after last week’s FTX exchange implosion.
In what has become an increasingly erratic market, investors don’t know what will happen next as more companies sound the solvency alarm and regulators step up investigations into the cryptocurrency space.
The mood among the majority is quite horrific, and even some well-known names in the industry are warning that it has set back several years as a result of last week’s events.
Meanwhile for Bitcoin, it’s business as usual. FTX isn’t its first disaster, and under the hood, the network remains as strong as ever.
Cointelegraph takes a look at the factors that are set to influence the BTC price movement in the coming days as the average worker deals with heavy losses and constant volatility.
Coded arcs for the new FTX Fallout
While little is certain in the current crypto market environment, it is safe to say that FTX and its ramifications are now the number one source of bitcoin price volatility.
The weekly chart says it all — a “red” $5,500 candle for the seven days through November 13 to the lowest weekly close since mid-November 2020, data from Cointelegraph Markets Pro and TradingView show.
BTC/USD 1-week candlestick chart (Bitstamp). Source: TradingView
At the time of writing, BTC/USD is still close to that close – $16,300 is emerging again as a relief bounce after the pair went rogue to just $15,780 on Bitstamp overnight.
BTC/USD 1-hour candlestick chart (Bitstamp). Source: TradingView
The story is far from over when it comes to FTX, as companies exposed to the exchange and related entities find themselves in trouble.
As such, commentators anticipate, there could be repeated offers in the coming days and weeks, as spillovers cause more and more cryptocurrency names to go out of business.
Exchanges are particularly on the radar, with Crypto.com, KuCoin, and others becoming the source of suspicion regarding liquidity.
That day, a sharp rise in withdrawal transactions at Crypto.com and Gate.io led to warnings that it could be the latest exchange to witness a “bank scramble” as investors seek control of their money.
Data from on-chain analytics firm CryptoQuant showed 1,500 BTC leaving Gate.io on November 13, with November 14 currently at around 800 BTC and rising.
Bitcoin outflow chart (Gate.io). Source: CryptoQuant
More broadly, the data showed that BTC reserves on the exchange are estimated to be around 2.09 million BTC, indicating that CryptoQuant may not reflect the true situation due to the turmoil.
The last time reserves were so low was in early 2018.
Bitcoin exchange reserves chart. Source: CryptoQuant
Bitcoin rebounded from $15,700 as Musk believes in BTC
Against the backdrop of constant uncertainty, Bitcoin price prediction is not an easy task.
Turning to the Moving Average Convergence Divergence (MACD), analyst Matthew Hyland warned that the BTC/USD 3-day chart is about to repeat a bearish setup that has resulted in losses both times it has appeared in 2022.
“Bitcoin 3-Day MACD is poised to cross bearish tomorrow for the first time since April,” he wrote:
“It can be avoided if BTC can get positive price action before the 3-day close. The previous two crosses in the past year led to more downward movement in the price.”
Annotated BTC/USD chart. Source: Matthew Hyland / Twitter
However, Hyland notes that after the 2014 Mt.Gox hack, it took nearly a year for Bitcoin to find a macro price bottom after the initial shock.
“It hasn’t even been 11 days since FTX closed,” he added.
Meanwhile, fellow Crypto analyst Il Capo said the market is ready for a “final capitulation,” which could come sooner rather than later.
This will come in the form of first a “bull trap” and then a firm rejection, he said in a series of tweets, sending the market to new lows.
For altcoins, he said, compensation will be “40-50% on average.”
On the shorter timeframes, popular Crypto trader Tony feared that even the lowest weekly close in two years could fail to hold as support.
“Nice breakout, but if we can’t hold the $16,400 swing low, it’s just a fake exit and we await a bearish test,” he commented about the rebound from intraday lows at $15,780.
The move came as Twitter’s CEO, Elon Musk, came as tacit support.
“BTC will succeed, but it could be a long winter,” he wrote in a Twitter debate the other day.
Twitter debate (screenshot). Source: Twitter
A short-term price catalyst came in the form of the largest exchange, Binance, which chose to create a recovery fund dedicated to helping protect companies.
Quiet macro week sees focus on equity correlation
The picture outside of the cryptocurrency underscores how unique FTX is as a “black swan” event for the industry.
While bitcoin and altcoins were busy shedding more than 25% in days, US stock markets recovered from losses earlier in the month.
As such, notes the research firm Santiment, there’s a distinct difference going B