Bitcoin Faces Steep Decline as Market Reacts to FTX's $2 Billion Grayscale Dump

Cryptocurrency

Summary:

Bitcoin faces a sharp decline below $40,000, down 18% from its peak. FTX's $2 billion Grayscale sell-off is a major contributor. Traders lost $241 million, and technical analysis hints at a potential bearish trend, with Bitcoin possibly dropping to $32,000. Investors are wary of FTX's impact on market stability.

SELL BTC-USDT

Close Time

CLOSED

39839.4

Entry Price

32000.0

43000.0

95893.9 +210.0 +0.22%

753.4

Pips

Profit

32000.0

39086.0

Exit Price

39839.4

Entry Price

43000.0

Bitcoin, the leading cryptocurrency, is undergoing a significant price decline, falling below $40,000 for the first time in over a month. The recent downtrend, primarily occurring within the last hour, saw BTC plummet from its opening at $41,555 to a low of $39,445. This represents a more than 4% decrease for the day and an 18% drop from its previous peak at $49,048.

Investors are closely monitoring the situation as the Relative Strength Index (RSI) hits 37, the lowest level since September 2023. The market sentiment is divided, with some lamenting losses while others see potential opportunities.

Crypto derivatives have taken a hit, with traders losing over $241 million. Long positions account for more than 70% of total liquidations, while short positions exceed $32 million. Despite the losses, the overall liquidation in the "REKT" fund indicates a staggering 500% increase.

The catalyst behind Bitcoin's decline appears to be FTX, as reports suggest investors sold over $2 billion of the Grayscale Bitcoin Trust following its transition to an exchange-traded fund. FTX's bankruptcy estate further exacerbated the situation by dumping 22 million shares, eroding confidence in the company.

The approval of Bitcoin ETFs led to significant inflows for funds managed by BlackRock and Fidelity. However, Grayscale's outflow is attributed to its ETF's perceived lack of public appeal, having existed for almost a decade before the conversion. FTX's sale of 22 million shares intensified concerns about the company's stability.

Technical Analysis

Bitcoin's technical analysis reveals the formation of a head and shoulders pattern, signaling a potential bearish breakout. Despite this, the current price remains above a crucial support level. If Bitcoin experiences a bearish breakout at this key level in the coming days, it may indicate a continuation of the bearish trend, potentially pushing Bitcoin down to $32,000.

TRADE RECOMMENDATION

SELL BTCUSD

ENTRY PRICE : 40000

STOP LOSS : 43000

TAKE PROFI : 32000

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Peterson

Commodity

Summary:

Today's oscillation will start from $2013 to $2039, and it is better to buy low and sell high.

BUY XAUUSD

EXP

EXPIRED

2013.00

Entry Price

2039.00

2009.00

2645.91 +2.33 +0.09%

Pips

EXPIRED

2009.00

2024.09

Exit Price

2013.00

Entry Price

2039.00

Fundamentals

During Tuesday's (January 23rd) Asian session, spot gold oscillated slightly, and it is now trading at $2023.

Yesterday, based on last week's data, the market expectation of the Fed rate cut was weakened. Also, gold oscillated and fell back down to the lowest price of $2016.5, failing to break the range of 2015-2020. Meanwhile, there was little space to rebound above, and gold touched its highest price in the Asian session at $2032, showing a narrow range of only 15 dollars. Yesterday, the peripheral stock markets continued to close higher, the S&P, Nasdaq, and the Dow have hit record highs. Besides, investors' risk appetite was significantly improved, and the market traded and eased expectations for 2024, as well as the recovery of the U.S. economy. And for gold, investors from both sides are careful, waiting for the U.S. PMI, GDP data, and the December PCE data on Wednesday. Thus, it is normal for gold to oscillate narrowly, which can be regarded as a storage of momentum. However, we should not predict or worry about the market in the second half of the week, but just prepare for the worst, and the market will give us the answer.

Gold was under pressure yesterday. Our strategic analysis recommended going long in the range of $2015-$2020, but the rebound is insufficient, offering little profit. Nevertheless, we maintain the idea that a retracement is an opportunity to go long in the medium and long term, and we will keep the previous long positions at $2010. Therefore, we will go long when a retracement emerges.

Today's focus: No heavy data. For this week, we need to pay attention to the January manufacturing and services PMI to be announced on Wednesday. On Thursday, durable goods orders, another revision of the fourth quarter GDP growth rate, the weekly Initial Jobless Claims, Chicago Fed National Activity Index, and New Home Sales will be announced as well.

Technical Analysis

Yesterday, gold maintained oscillated narrowly around the 5-day SMA ($2022). After dropping to the range of $2015-$2020, gold rebounded slightly and closed the daily chart lower with limited space above. As the oscillation was about $15, no position was recommended to be held. However, gold is testing the lower support in the channel below, and if it keeps testing, gold is likely to drop further. Anyway, the data in the second half of the week will decide the trend.

Technically, gold maintained an oscillating pattern yesterday. Although it did not recover the resistance, gold faces multiple supports below. The initial support is near $2013, and further support is at $2000. Today, our focus is on the area from $2015 to $2020. Even if gold falls below at the beginning of the week it is difficult to cross through it effectively, which also gives us the opportunity to go long shortly. At present, the 1H chart shows an oscillation trend at $2020 for a long time, and momentum is generated. The next step is to stop loss. Although you can turn your losses into floating losses during oscillations, it is better to catch the right time during the trade and stop relying on oscillations. Today's trading range will be from $2013 to $2039, where aggressive traders can buy low and sell high. Storm Approaches, Gold Oscillated Narrowly_1

Storm Approaches, Gold Oscillated Narrowly_1

Trading Recommendations

Trading direction: long

Entry price: 2013

Target price: 2039

Stop loss: 2009

Support: 2020.000/2010.000

Resistance: 2030.000/2042.000

Risk Warnings and Disclaimers

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Zi Cheng

Forex

Traders' Opinions

Summary:

The USD/CAD is encountering a hurdle as a result of the enhanced crude oil prices.

SELL USDCAD

Close Time

CLOSED

1.34638

Entry Price

1.31793

1.35647

1.40805 +0.00113 +0.08%

59.2

Pips

Loss

1.31793

1.35230

Exit Price

1.34638

Entry Price

1.35647

Fundamental Analysis

The USD/CAD is making an effort to reverse its recent advances, driven by the positive trend in crude oil prices. During the Asian session on Tuesday, the USD/CAD pair is hovering near 1.3480. The Canadian Dollar, witnessed losses against the US Dollar in the preceding session, a development attributed to risk aversion stemming from the heightened geopolitical tensions in the Middle East.

The West Texas Intermediate price has sustained its upward trajectory for the second consecutive session, reaching approximately $74.70 per barrel at the current press time. The surge in crude oil prices is primarily linked to concerns about global energy supplies. Geopolitical tensions have risen due to a drone strike on Russia's Novatek by Ukraine, while disruptions in crude oil production in the United States caused by extreme cold weather further contribute to the upward pressure on oil prices.

The US Dollar Index remains steady following recent gains, driven by a demand for the US Dollar amid risk aversion sentiment associated with the heightened geopolitical situation in the Middle East. Military actions, including new air strikes in Yemen by the United States and the United Kingdom targeting Iran-led Houthi terrorists, have prompted investors to seek safety in the safe-haven US Dollar, thereby supporting the USD/CAD pair.

The US Conference Board has reported a modest improvement in the Leading Economic Index for December, moving from -0.5% in November to -0.1% in December, surpassing expectations for an improvement to -0.3%. Looking ahead, Tuesday is expected to bring the release of the Richmond Fed Manufacturing Index for January, providing additional insights into the state of the US economy.

Technical Analysis

USD/CAD has been forming bearish market structure of lower lows and lower highs. The current price is at a key resistance zone where it has rejected USD/CAD from moving higher 2 times. Besides that, USD/CAD is also at a strong dynamic resistance which is the 200 Day SMA. We have the strong resistance zone and the strong dynamic resistance. I will be selling USD/CAD towards the support area.

TRADE RECOMMENDATION

SELL USD/CAD

ENTRY PRICE : 1.34658

STOP LOSS : 1.35647

TAKE PROFIT : 1.31793

Risk Warnings and Disclaimers

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Eva Chen

Forex

Central Bank

Summary:

The Bank of Japan (BOJ) is set to hold a policy meeting on Tuesday, and if the central bank remains unchanged, the USDJPY may see further gains. The market anticipates that the Bank of Japan will maintain its policy settings, although the central bank, not known for transparency, has surprised the market in the past.

SELL USDJPY

Close Time

CLOSED

148.300

Entry Price

141.900

150.110

149.732 +0.149 +0.10%

112.6

Pips

Profit

141.900

147.174

Exit Price

148.300

Entry Price

150.110

Fundamentals

In December, Japan's core Consumer Price Index (CPI), excluding fresh food, slightly eased from 2.5% to 2.3%, aligning with market expectations. This slowdown brought the core inflation rate to its lowest level since June 2022 but still marks 21 consecutive months above the Bank of Japan's 2% target.

The overall CPI also experienced a deceleration, dropping from 2.8% to 2.6%. Furthermore, the core CPI, excluding food and energy, saw a slight decline from 3.8% to 3.7%.

A noteworthy aspect of the CPI data is the stability in service prices, which rose by 2.3% year-on-year, consistent with the previous month. Excluding the impact of the sales tax hike, this rate signifies the fastest rise in service prices in thirty years.

A significant factor contributing to the inflation slowdown is the substantial drop in energy prices, declining by 11.6% year-on-year. This decline is driven by decreases in electricity and city gas prices, dropping by 20.5% and 20.6% year-on-year, respectively, primarily due to government subsidies.

The BOJ's policy meeting scheduled for this Tuesday holds the potential for any hints of a shift in monetary policy, which could significantly impact the yen. The current market expectation is that the BOJ will maintain the status quo, but the central bank, known for its lack of transparency, has surprised the market before. The recent major earthquake has tempered expectations of policy changes at this meeting.

Additionally, nationwide wage negotiations are set to take place in March, and the BOJ is inclined to analyze the results of these negotiations before making any policy adjustments. This suggests that the timing for a significant statement announcement may be ripe in the April meeting. Even if the BOJ remains cautious tomorrow, investors will have much to digest, including the latest inflation report, quarterly economic forecasts, and Governor Kazuo Ueda's subsequent press conference.

As investors currently expect no policy change from the BOJ this week, the yen's performance will be driven by the central bank's latest guidance. If the BOJ does not signal a stronger inclination to raise rates in the March or April meetings, the yen may weaken further, or conversely, strengthen if such signals are provided.

Technical Analysis

As the market awaits the two-day BOJ meeting, the USDJPY remained stable on Monday. The asset has steadily risen since touching a five-month low of 140.25 in late December, continuously setting higher highs. However, in the past few hours of trading, the upward momentum appears to ease slightly as momentum indicators suggest diminishing bullish pressure.

In the short term, any downturn could find decent support near the 100-day SMA, currently around the 147.00 level. A decisive break below this level would test the next relevant support around the 146.60-146.55 range. Even lower, the 38.2% Fibonacci retracement level at 144.69 could offer downside protection.

On the other hand, the 148.00 psychological level and subsequently the 148.15-20 range now seem to pose immediate obstacles to recent highs. An increase in subsequent buying pressure could lead to a strong breakthrough of the 149.00 level, considered a new trigger for bullish trades. Subsequently, bulls may target the psychological level of 150.00.

Overall, ahead of the Bank of Japan meeting on Tuesday, the USDJPY appears to be in a consolidation mode. Any surprises could end the range-bound trading. Ultimately, we believe the structure may evolve in the expected direction. In terms of trading strategy, a focus on going short at highs is recommended.

Trading Recommendations

Trading Direction: Short

Entry Price: 148.30

Target Price: 141.90

Stop Loss: 150.11

Valid Until: 2024-02-05 23:55:00

Support: 147.56, 146.60, 145.61

Resistance: 148.20, 148.83, 149.67

Risk Warnings and Disclaimers

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Eva Chen

Economic

Commodity

Summary:

The reopening of Libya's largest oil field offsets Red Sea shipping risks, exerting pressure on oil prices.

SELL WTI

Close Time

CLOSED

74.351

Entry Price

69.020

76.800

69.698 -0.020 -0.03%

244.9

Pips

Loss

69.020

76.813

Exit Price

74.351

Entry Price

76.800

Fundamentals

Oil prices fell 1% on Monday. Libya's National Oil Corporation announced that the Sharara oil field, with a previous production of around 270,000 barrels per day, would resume production after a three-week shutdown.

As a member of OPEC, Libya's resumption of crude oil production increases global supply, temporarily overshadowing the impact of tensions in the Red Sea region on shipping and bringing OPEC countries' total crude oil production back to over 1 million barrels per day.

The crude oil market has already factored in the disruptions in the Red Sea and the Israel-Hamas conflict, coupled with lingering economic concerns, suggesting that crude oil prices are likely to continue fluctuating within a certain range.

WTI crude oil may glean insights from inventory data from API and EIA, as substantial withdrawals in last week's report have helped sustain the commodity.

Other market catalysts this week include central bank statements and US GDP data, which could influence the trajectory of oil prices. A dovish policy bias and weak US data might imply upside potential for risk assets, as it would draw traders' attention to lower borrowing costs, thereby boosting business and consumer activities.

Range Trading with Focus on Buying Low and Selling High_1

Technical Analysis

WTI crude oil continues to exhibit an upward trend in the hourly timeframe, as the structural pattern forms continuously rising lows and highs connected by an ascending channel.

The price is testing the 50% Fibonacci retracement level at $72.69 per barrel, close to the dynamic support of the moving averages, and may potentially decline further to the 61.8% Fibonacci level at $72.20. If either of these levels can serve as a bottom, crude oil might recover toward the fluctuation high at $74.78, close to the channel's top.

Technical indicators suggest that the bullish momentum is likely to persist, as the 100 SMA is slightly above the 200 SMA, providing support in the middle region of the channel.

The stochastic oscillator is in the oversold zone, indicating exhaustion in bearish momentum; therefore, an upward movement implies that buyers are ready to take charge.

However, further upside is not favored, as the upward resistance of the triangle consolidation remains robust. The Fibonacci retracement tool also indicates potential bearish levels where bears may be waiting. The RSI has significant room to decline before reaching the oversold zone, suggesting that selling pressure may persist until the oscillating indicator rebounds.

In conclusion, the bottom for a correction will be around $71.00, near the channel's bottom, as breaking below this level may signal the beginning of a reversal.

Trading Recommendations

Trading Direction: Short

Entry Price: 74.40

Target Price: 69.02

Stop Loss: 76.80

Valid Until: 2024-02-05 23:55:00

Support: 72.69, 72.20, 71.01

Resistance: 74.27, 74.60, 75.26

Risk Warnings and Disclaimers

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Eva Chen

Economic

Stocks

Summary:

The U.S. stock market closed significantly lower on Tuesday because of the rising yield of U.S. Treasury Securities and the fear that the Federal Reserve may not cut interest rates imminently.

SELL US30

Close Time

CLOSED

38070.60

Entry Price

36118.00

38640.00

44896.44 +38.99 +0.09%

5694.0

Pips

Loss

36118.00

38641.40

Exit Price

38070.60

Entry Price

38640.00

Fundamentals

All three major U.S. stock indexes closed lower on Tuesday, with the Dow closing with a particularly sharp decline; the Dow Jones fell 231.86 points, or 0.62%, to 37,361. The Standard & Poor's 500 closed down 17.85 points, or 0.37%, to 4765.

The Nasdaq rose briefly during the trading session before closing slightly down 28.41 points, or 0.19 percent, to 14,944.

The U.S. stock market is currently in the midst of earnings season, with investors reacting to quarterly earnings updates from some of the giant U.S. companies like Goldman Sachs and Morgan Stanley, in addition to digesting hawkish comments from several central bank officials, including the Federal Reserve.

Goldman Sachs rose about 0.7%. It reported fourth-quarter net income of US$1.87 billion, or US$5.48 per share, up from US$1.19 billion, or US$3.32 per share, in the year-ago quarter.

Morgan Stanley closed down more than 4%. Morgan Stanley's fourth-quarter net income totaled US$1.38 billion, or US$0.85 per share, compared with US$2.11 billion, or US$1.26 per share, a year ago.

Boeing shares are down nearly 8%. Shares fell after Wells Fargo downgraded it due to ongoing problems with the 737 Max 9 model.

PayPal, Moderna, Hewlett-Packard, Nike, Warner Bros. Discovery, Bach Hughes, Delta Air Lines, Chevron, Invesco, Textron, Netflix, United Airways Holdings, and Bank of America were down between 2 and 4%.

Advanced Micro Devices shares are up more than 8%. It continues to soar on optimistic market comments about demand for semiconductors.

MARKET WATCH: U.S. stocks had another bullish week last week. The Dow Jones Industrial Average briefly hit a new high. However, investors will be bracing for a bearish move in the stock market next, as a healthy adjustment will come, as will a bearish correction. Technical graphics show that the daily structure of the index is in a downward pattern of death cross.

Similarly, the S&P 500 has climbed all the way to near 2022 highs in a double-top pattern. This is a very bad trading level. A double top is an "extremely bearish technical reversal pattern," a structural pattern in which an asset hits its highs twice and reflects a lack of upside strength.

The tech-dominated Nasdaq 100 is continuing its uptrend and hit a new all-time high of 16,969 on Thursday, December 28. While it continues to trade above its month-long uptrend line, however, short-term overbought conditions could lead to a downward correction at some point.

Although the signs are not yet obvious after the current sharp sell-off in the market, the so-called 'Big Seven' have been consolidating since July last year, which implies that a change in their trend is imminent. The rotational effects of the three major stock indices will ripple through each other.

The Path of Least Risk is the Downside when Balancing Bulls and Bears_1

Technical Analysis

The Dow Jones Industrial Average is currently showing neutral overall momentum, indicating a lack of clear trend direction, but the technical indicators are showing signs of a death cross. Prices will likely continue to fluctuate between the first resistance and first support levels before retreating.

Although the market has broken below the first support level at 37247, it is still considered a swing-low support level, suggesting that there is still buying strength in the short term. In addition, this level aligns with the 78.60% Fibonacci retracement, increasing its potential as a support area. The second support level at 37078 is considered a swing-low support level, further reinforcing its importance as a potential level of buying interest.

In terms of resistance, the first resistance level at 37433 is an overlapping resistance level indicating the presence of selling levels. The second resistance level at 37814 is associated with a multiple swing-high resistance level, suggesting that selling pressure could intensify in this area.

Overall, the Dow Jones Industrial Average, despite the signs of upward and downward breaks that have confused the market in recent trading, is of course trading on the least risky criteria for trading; after balancing the bears and bulls, we believe that the path of the least risk is the downside. It is recommended to go short at the highs.

Trading Recommendations

Trading direction: Short

Entry price: 38100

Target price: 36118

Stop loss: 38640

Deadline: 2024-02-05 23:55:00

Support: 37247, 37078, 36572

Resistance: 37433, 37814, 37839

Risk Warnings and Disclaimers

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Eva Chen

Commodity

Central Bank

Summary:

The gold market remains in a narrow consolidation as investors waver on the timing of the Fed's interest rate cut this year.

SELL XAUUSD

Close Time

CLOSED

2038.00

Entry Price

1973.00

2060.00

2645.91 +2.33 +0.09%

122.4

Pips

Profit

1973.00

2025.76

Exit Price

2038.00

Entry Price

2060.00

Fundamentals

The likelihood of a rate cut in March was perceived as 50:50 in Friday's trading, marking a significant decrease in rate cut expectations compared to the previous week. The hawkish shift in the Fed's monetary policy was a key factor leading to a sharp drop in gold prices last Wednesday, just above $2,000.

Despite a rebound from recent lows, gold concluded the week in a downward manner. Economic data provided little guidance on the Fed's monetary policy, and investors seem content holding higher-risk assets, suggesting a path of minimal resistance for gold this week is either consolidation or further decline.

Optimistic macroeconomic data released last week in the US indicates ongoing economic resilience, providing room for the Fed to maintain higher interest rates for a longer period. Additionally, hawkish remarks from several Fed officials compel investors to lower expectations for more aggressive policy easing in 2024, further weakening non-yielding gold.

With bets supporting a rate cut decision in March significantly reduced, gold gradually declined towards $2,020. The 10-day SMA around $2,030 consistently acted as resistance, making it challenging for gold to regain appeal.

This week, a survey involving 14 analysts on gold's trend showed a substantial decrease in bullish sentiment from the previous week. Six analysts (42%) predict an increase in gold prices this week, four analysts (29%) anticipate a decline, and four analysts (29%) remain neutral.

Simultaneously, an online poll with 150 votes reflects retail traders aligning closely with expert opinions. 66 retail traders (44%) expect an increase in gold prices this week, while 44 respondents (29%) anticipate lower prices, and 40 respondents (27%) hold a neutral outlook on gold's near-term prospects.

Looking ahead, as investors await key economic data later this week, expected to provide new insights into inflation and interest rate prospects, gold may experience sideways movement at the beginning of the week but could continue to record declines by week's end.

Technical Analysis

After a slight decline on Wednesday and Thursday last week, gold prices edged higher on Friday from just above the $2,000 level, currently finding some support.

The technical outlook in the daily chart remains weak after the recent drop, but bullish hopes persist as bears have not tested below $2,000, and a descending wedge has formed. The potential for a recovery is still anticipated.

The initial resistance on the upside is at $2,026, followed by the 10-day SMA at $2,030, expected to limit the upward movement and maintain bearish pressure to accumulate necessary chips below $2,000. A decisive break below $2,000 would further weaken market sentiment, with the focus shifting to the $1,973 - $,1963 range.

Overall, gold bulls are attempting to offset the bearish trend since the high point of $2,088, but the path to higher levels remains challenging, particularly due to weak support from momentum indicators. In terms of trading, a strategic approach with a focus on positioning is recommended.

Trading Recommendations

Trading Direction: Short

Entry Price: 2038

Target Price: 1973

Stop Loss: 2060

Valid Until: 2024-01-31 23:55:00

Support: 2000, 1980, 1973

Resistance: 2024, 2030, 2042

Risk Warnings and Disclaimers

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