The cryptocurrency market, already in a slump, sank further on 21 November, with market capitalisation down from over $3 trillion the previous day, to $2.18 trillion at time of writing, at 6 pm, data on CoinMarketCap showed.
Data on CoinGecko showed that for the past six weeks period, the crypto market has lost close to $1.2 trillion in market cap cumulatively. This comes even after the world’s largest cryptocurrency, Bitcoin, touched all-time record high above $1,20,000 in October. Since then, the token has lost 12% year-on-year (YoY), also recording a record single-day slump of $19 billion in October itself.
Meanwhile, the second largest cryptocurrency Ether has lost close to 19% YoY. “The unprecedented pace of Ethereum accumulation by institutional investors poses fundamental threats to Ethereum,” according to co-founder Vitalik Buterin. Currently, nine Wall Street giants, including BlackRock, as well as several dozen DAT companies, have accumulated 10.4% of the total supply of Ethereum.
Investors seem to have lost appetite for risk amid concerns over overvalued tech stocks and an artificial intelligence (AI) bubble, and as bets on near-term US interest rate cuts faded, as per a Reuters report.
Crypto prices today: Bitcoin, Ether, Tether, XRP, Binance — Top 5
- Bitcoin is trading at $83,035.15, down 0.98% over the day, with market cap of $1.66 trillion and trading volume of $132.48 billion.
- Ethereum is trading at $2,724.24, down 1.55% over the day, with market cap of $328.96 billion and trading volume of $58.67 billion.
- Tether is trading at $0.9988, down 0.01% over the day, with market cap of $184.63 billion and trading volume of $224.5 billion.
- XRP is trading at $1.90, down 1.23% over the day, with market cap of $114.9 billion and trading volume of $9.73 billion.
- Binance Coin is trading at $817.46, down 0.84% over the day, with market cap of $112.75 billion and trading volume of $4.67 billion.
What is the outlook for Bitcoin and the crypto market going forward?
In the short-term, Alex Kuptsikevich, chief market analyst at FxPro feels that at Bitcoin’s current price below the $83,000 level, timing and scale of the dynamics suggest a wave of margin calls. He added that a similar pattern was seen when RSI index on the daily charts fell to 20, before the massive rally in August 2023. “Touching this level in mid-2022 was not far from the price’s bottom (10% higher), but the reversal then took 6 months to materialise,” he added.
XWIN Research warns that Bitcoin could fall to the $60,000-80,000 range and remain there until the end of the year if the Fed refuses to cut its key rate on 10 December.
Edul Patel, CEO of Mudrex told Mint that fall in Bitcoin prices comes amid weakness across all major financial markets as macroeconomic uncertainty turns investors cautious. “Over 65,000 Bitcoins were moved to exchanges by short-term holders, contributing to the selling pressure,” he said.
CoinSwitch Markets Desk cautioned that Bitcoin “is dropping toward major liquidity zones where many leveraged traders’ stop-losses sit.”
Not all doom and gloom, strategic investments coming?
A spokesperson for WazirX told Mint that the price of Bitcoin has been impacted by the capital outflows and decreasing incoming investments from institutions but added that the narrative around strategic investment-driven inflows is gaining ground.
Mohit Kumar, Head of Markets Research at Delta Exchange acknowledged that Bitcoin is “very close to a bottom” but added that while price volatility is likely in the coming week, the token should have a pullback rally to $95,000-$1,00,000 levels.
“The next phase depends on liquidity. US liquidity looks close to a bottom. Global indicators appear more stable. If the global cycle turns, Bitcoin will likely benefit. If conditions stay tight, the market may continue to chop until risk appetite improves, but more likely, the price will show sideways movement rather than a steep decline,” WazirX spokesperson added.
Long-term Bitcoin to see recovery? What experts say…
CoinSwitch Markets Desk added, “The next big cluster could be between $78,000 and $75,000, meaning the price may fall there before stabilising. These areas often trigger forced selling first, then attract buyers, making likely bounce zone, as historically buyers are active at lower levels.”
Citi analyst Alex Saunders told Reuters $80,000 would be an important level as it is around the average level of bitcoin holdings in ETFs.
For the future Patel was optimistic, adding, that past cycles show that this kind of behavior from short-term holders often appears near market bottoms, suggesting a trend reversal. “Buyers now need to defend the $80,000 support to prevent a deeper correction, while $91,000 remains the key resistance,” he added.
WazirX is also not deterred, the spokesperson said, “None of this alters Bitcoin’s long-term pathway. The supply curve is fixed. Institutional demand is climbing. Adoption continues to broaden. Investors should approach this moment with clarity. This drawdown is not a structural failure but simply a sentiment setback after a year of high expectations.”
Kumar concurred, “Current weakness in market is because of technical breakdown of 1,00,000 level and poor liquidity conditions. Excess leverage in the system also led to unprecedented liquidations. Going ahead, Liquidity is going to significantly improve over the coming weeks. Also, we don’t see much downside in US tech stocks after good earnings by Nvdia. Better liquidity conditions, resumption of rally in US tech leaders and flushing out of the excess leverage in system make perfect conditions for a pullback rally.”
