Volatility Lies Ahead for Bitcoin After Market Shakeout

The latest moves in crypto markets, in context

By the CoinDesk Markets Team

Edited by Bradley Keoun, Managing Editor, Markets

September 8, 2021

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Bitcoin (BTC)

-9.4% $46,162

Ether (ETH)

-10% $3,351

(Price data as of September 8 @ 10:30 UTC)

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Market Moves: Bitcoin Trades Weak After Tuesday’s Leverage Washout, Analysts See More Price Volatility Ahead

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Market Moves

by Omkar Godbole

Bitcoin Trades Weak After Tuesday’s Leverage Washout, Analysts See More Price Volatility Ahead

Bitcoin remains on offer as market sentiment remains weak in the wake of Tuesday’s leverage-driven price slide, the dour mood in equity markets, and negative crypto newsflow.

The cryptocurrency is currently trading near $45,300, representing a 3% drop on the day. Prices fell by 11% on Tuesday and reached as low as $40,000 on some exchanges, reportedly due to the forced closure of long positions in the derivatives market and liquidity shortage caused by exchange downtimes and market makers going offline.

After a big decline and leverage washout, traders tend to be less confident or more risk-averse for some time. That often results in flat-to-negative market action we see at press time.

Additional bearish pressure could be stemming from the U.S. Securities and Exchange Commission’s (SEC) attempts to stop the Nasdaq-listed crypto exchange Coinbase from launching its lending program offering 4% annualized yields. That’s a significantly higher return than the 1.5% yield offered by the U.S. 10-year Treasury note and could bring strong inflows to the crypto market.

“U.S. authorities [are] standing in the way of innovation. $100 trillion of negative real yields on global bonds drives investors into high-yielding cryptocurrency,” Dan Tapiero, founder of DTAP Capital LLC, tweeted early today.

Chart shows bitcoin's implied price volatility versus realized volatility. (Source: Skew.)

Last, risk-off in traditional markets could be keeping bitcoin bulls at bay. Major European equity markets are currently nursing a 1% loss on growth concerns, and futures tied to the S&P 500 are down 0.5%. Meanwhile, the U.S. dollar is gaining ground against major currencies.

Bitcoin’s options market is signaling higher near-term price volatility relative to the volatility seen in recent weeks. The cryptocurrency’s three-month implied volatility (IV) or expectations for price turbulence over the next 12 weeks stands at 4.8% and realized volatility (RV) is seen at 4%.

The spread has narrowed slightly from 100 basis points to 80 basis points in the past 24 hours as realized volatility has increased from 3.8% to 4% following yesterday’s drop. Experts foresee more volatility ahead.

Read the original story here:

Bitcoin Trades Weak After Tuesday’s Leverage Washout, Analysts See More Price Volatility Ahead

Technician's Take

by Damanick Dantes, CMT

Bitcoin Stabilizes Around $46K After Selloff; Resistance at $50K

Bitcoin is stabilizing around the 200-day moving average at $46,000 after a sharp selloff on Tuesday. The cryptocurrency is down about 8% over the past 24 hours as sellers are in control of the $50,000 resistance zone.

Upside momentum has slowed over the past month, although buyers were able to defend support around the $42,000 breakout level achieved Aug. 6. Buying could be limited, however, as overhead resistance remains strong around the $55,000-$60,000 range.

The relative strength index (RSI) on the four-hour chart is the most oversold since the August 6 breakout above $42,000. This could encourage buyers to return around current support levels.

Bitcoin daily price chart shows the market appearing to find support around the 200-day moving average. (TradingView, CoinDesk)

Read the original story here:

Bitcoin Stabilizes Around $46K After Selloff; Resistance at $50K

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ICYMI

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Latest Headlines

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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.

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