Bitcoin struggles to break the $40,000 level, down 4% in the past 24 hours
Bitcoin is the king of cryptocurrency for a reason. Most major cryptocurrencies sank incredibly low on Saturday, and so did Bitcoin (BTC), but it doesn’t seem to be receding.
Bitcoin traded at $39,510, down 4%, late Friday, based on Coingecko charts signaling dangerous waters in trading. Traders have suffered huge equity losses with this trend.
It is comforting, however, that Bitcoin and other cryptocurrencies are currently often pegged to stocks in terms of volatility in interest rates and market values.
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The Big 4% Drop for Bitcoin
Four percent may be too small to matter, but it is for Bitcoin and all other cryptocurrencies. With that big dip, investors and traders are increasingly aware of the risks and have decided to wait on the sidelines and see what happens next, rather than risk serious losses along the way.
However, if you don’t take action at the right time, it can hurt and reduce the market’s returns.
Altcoins also went further down compared to Bitcoin. Fundamentally, it is typical for altcoins to underperform when combined with other cryptocurrencies, especially BTC, as it has a higher risk profile compared to BTC.
Bitcoin remains stable despite dip
More positively, technical indicators have shown that Bitcoin should be more stable at $38,500 even with the reduced price momentum. Traders are always looking for unexpected price spikes, so the downward trend with BTC can make it very difficult for options traders to make a profit in these erratic price swings.
BTC total market cap at $755. billion on the weekend chart | Source: TradingView.com
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The current trends circling the crypto and metaverse worlds can have a major impact on the behavior of traders. When Arthur Hayes, co-founder of BitMEX, said that there is an impending BTC price crash seeking around $30,000, traders who sold their BTC followed suit.
This caused traders to sell their May and June option calls like crazy, pushing risk reversals down from -6% to around -10% for both Bitcoin and Ethereum.
Still a bullish trend
With Bitcoin’s all-time low in recent days, this also highlights minimized bearish sentiment on the part of options traders. Traders who are cautious at this point are fairly predictable.
Overall, trading activity in the global cryptocurrency market has decreased significantly to $1.88 with very minimal gains in the last 24 hours. Still, the total trading volume rose to about 18%.
While the very strict monetary policy has had a negative impact on speculative assets such as cryptocurrencies and stocks, the indicators clearly show that it will remain bullish for a while.
Featured image of EPA-EFE, chart of TradingView.com