At this point, it’s tradition for bitcoin to welcome BTC hatchlings with a relentless baptism of fire, sliding 20% in just a few hours. Don’t worry hodlers, you might even get to experience an 80% draw-down if you’re lucky enough!
However, bitcoin isn’t the story this time around, Ethereum is. Here’s why.
Let’s dig in.
The baptism of fire returns as BTC drops $5000
Bitcoin dropped $5,000 on Monday to hit a low of $28,560 after trading above $33,600 just this morning.
The sudden drop came just after bitcoin breached new all-time highs above $34,700, signalling an incredible amount of new institutional money flowing into the space.
The move triggered a cascade of long liquidations to the tune of $190,000,000 on Binance alone, according to figures from Glassnode.
Once you take a market-wide perspective, the figures become even more jarring, with over 500 million in long liquidations describing an absolutely dreadful picture for short-term traders on the wrong side of the equation.
All in all, liquidations followed January 3rd figures of over $1.69 billion worth of “long” positions getting liquidated across various crypto exchanges, with over $567 million of those occurring on Binance.
Since then, however, it appears that bitcoin has regained control of the $30,000 psychological level.
Barely two weeks ago, $20,000 was considered expensive. Today, market participants agree that $28,000 is a good price to purchase bitcoin.
The baptism of fire came and went, and there’s plenty more where that came from, you can be sure of that.
Ethereum: Above and beyond
As bitcoin continues its parabola, Ethereum has been slowly and sneakily gaining momentum, per the previous newsletter.
Indeed, Ethereum leaped well-beyond the $850 figure to $1,160 in just a matter of hours.
That’s a 51% jump in a little over 24-hours.
As it happens, Ethereum is still under its all time high at $1,380.
In retrospect, this price will appear cheap the same way a $20,000 bitcoin is relatively cheap today. Of course, there are no shortage of naysayers, but decentralised financial products with real use-cases such as USDC yield-farming on SwissBorg are real.
There are hundreds of projects, many of which are complete garbage, but others which offer good value (in light of zero or negative yielding bonds).
Technically, Ethereum also appears to have bottomed out against Bitcoin for the time being.
A few weeks ago we discussed the likelihood of the ETH/BTC pair trending towards 0.05 Satoshis in 2021 in the telegram channel. It appears that this thesis is about to play out as various confluent factors come together.
In the last few hours, ETH/BTC tapped the 0.0349 weekly resistance level before cooling off. That’s a 51% impulsive move in the ETH/BTC pair in less than 48-hours; if that’s not a reversal signal I do not know what is.
Ethereum bulls will attempt to breach this level irrespective of what occurs in both the bitcoin and ethereum USD pairings.
As such, at the time of writing, it’s safe to say that strong attempt to reverse the trend is underway. But a weekly super-trend confirmation would cement this thesis further, per the above chart.
As bitcoin redefines scarcity into an absolute tamper-proof digital format, Ethereum is showing itself to be the burgeoning go-to platform for decentralised finance.
This time, let’s get rid of the Ponzi’s and pay more attention to the good actors in the space (of which there are many).
From a price-perspective (which is what you’re here for), Bitcoin is clearly in a parabolic trend, and all parabolas end with steep euphoric rises and subsequently massive crashes. This one will be no different, which is why taking profits on the way up is paramount for any strategy.
Should bitcoin break and close below $27,700 on the daily time-frame, then a deeper and longer correction is likely, at which point investors should act accordingly.
Either way, the next significant correction — which could last anything between 2–4 weeks — will be an opportunity for those who missed out to get in. Don’t miss it.
Catch you next time.
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Another Bitcoin Baptism of Fire as Ethereum Nears All Time Highs! was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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