The crypto market has seen some intense turbulence throughout the past few days, with Bitcoin firmly guiding most altcoins’ price action over the past few weeks.
BTC’s lackluster price action has caused the market to range sideways throughout the past several weeks. This stability did show some signs of degrading yesterday, although the decline sparked by the benchmark cryptocurrency appeared to be fleeting.
Yesterday’s short-lived plunge was sparked by the crypto’s rejection seen at $10,050 the day before. This was simply the latest in a series of harsh rejections that it has faced at this level throughout the past several days and weeks.
The series of rejections seen within the five-figure price region does appear to have done some notable damage to the sentiment surrounding BTC.
Data shows that investors have growing incredibly fearful over the past few days.
This appears to be correlated to an ongoing slide in Bitcoin’s daily trading volume. These are bearish signs for where BTC trends next.
Bitcoin Investors are Growing Fearful as Consolidation Phase Persists
Bitcoin has been caught within a trading range between $9,300 and $9,900 over the past several weeks.
Overnight, bears did force the crypto below the lower boundary of this trading range, but buyers were able to quickly push it back into the middle of this trading range.
It is important to note that the recent decline was brought about by a sharp influx of selling pressure seen when BTC tapped $10,000.
The rejection here appears to have significantly degraded crypto investors’ sentiment, as the Fear and Greed Index shows a decisive shift towards fearfulness.
Arcane Research spoke about this within a recently released report, explaining that the index is now sitting at its lowest level seen since late-April.
“The Fear & Greed Index dropped back down in the “fear” zone yesterday, as the BTC price took a solid hit. The Index is now at 39, the lowest level since late April…Many investors surely have the brutal drop in March fresh in mind,” they noted.
Arcane does note that some of this uncertainty is due to the stock market’s massive decline yesterday.
BTC Trading Volume Continues Sliding
One trend that clearly shows that this fear is adversely impacting the crypto market is the declining trading volume seen by the benchmark crypto over the past month.
After peaking in mid-May, Bitcoin’s trading volume has been consistently trending downwards over the past several weeks.
Arcane notes that this trend is bearish for the crypto, as it points to underlying weakness amongst buyers.
“The 7-day average real trading volume saw a solid spike last week but has looked weak again this week. Still, yesterday’s volume was high, which is a bearish [sign] as the large price drop occurred on increasing volume.”
Featured image from Shutterstock.
Uniswap could be a stumbling block for DeFi decentralization
Unsiwap’s governance vote has been a hot and controversial topic, with questions raised surrounding its centralisation
There are concerns that an Ethereum flash crash may happen when UNI mining is concluded in November. Industry experts have embarked on finding more flaws in addition to the centralisation concerns resulting from Uniswap’s first governance vote.
The last whale account took the proposing side of Dharma. The conclusion of the vote, therefore, means only a handful of addresses with the majority of UNI tokens will have governance power.
It is worth noting that three addresses accounted for nearly all 39.5 million votes in support of the proposal, with only about 700,000 in opposition. The Dharma and Gauntlet proposals’ approval gives them a majority if they agree on any upcoming decision. However, this isn’t the only thing to worry about.
According to Ryan Berckmans from Predictions Global, the governance could be a hindrance to the DeFi sector. Berckmans also predicts that the central control could impact volatility on Uniswap.
Another concern is the conclusion of UNI liquidity mining on November 17. Berckmans points out that about $800 million in Ethereum will be pulled out from the pools when they ultimately expire. This, in turn, could result in a flash crash and even disrupt the whole decentralised finance sector.
In his opinion, the feasible way of keeping the sector stabilised is by perpetuating the UNI farming incentive. He also recommended designating executives to act as governance officers similar to what Ethereum has adopted with Tim Beiko and the new EIP 1559 fee proposal.
Ethereum 2.0 could be two months away or less
Based on updates from the developers involved in the project, Ethereum 2.0 could be six to eight weeks away from completion
It has been a week since the second testnet (Zinken) was successfully deployed for Ethereum 2.0. The success of the second trial watered down any doubts and concerns from the first Spadina testnet that it was to be a failure.
Developer Ben Edgington shared an update on the Ethereum 2.0 project yesterday, detailing news from the Beacon Chain testing. The update revolved around the publishing of the first release candidate for Phase 0.
The post read, “Your newest news in #Ethereum 2.0 is here! https://t.co/97X85jdCzM. Sorry it’s a bit late, and a bit rushed. I took some time off; it was nice 😎 Back now, refreshed and raring to go 🚀”
Edgington asserted that the deposit contract was now ‘good to go’ and hinted that the Beacon Chain genesis would be available in about six to eight weeks. Of course, this is only an estimate, and there’s no guarantee that things will turn out that way. So far, there hasn’t been an announcement regarding the official launch date.
He also talked about depositing to fake contracts — a possible likelihood in the subsequent stages.
“Many fake deposit contracts and Launchpad front-ends will erupt in the coming days. Look out for the official announcements: do not send Eth to random contracts; this is not DeFi.”
The developer emphasised the need for more client diversity around the network, saying that the collective effort would be crucial in the success of the project. He went on to add that Prysm was still the leading player after the firm developed its own ETH 2.0 client.
Black Monday Anniversary: Why Bitcoin Investors Should Be Concerned
Today marks the 33rd anniversary of the Black Monday on Wall Street that sent stocks setting historic records for intraday declines. Although this year already had a similar day of its own, there’s reason to believe that another collapse could happen in Bitcoin.
Here are the primary factors behind what could cause the crypto market to drop on the ominous anniversary.
Will Bitcoin Bow To Black Monday Anniversary?
Black Thursday is a day that crypto investors won’t soon forget. In a flash, Bitcoin price plummeted from over $7,000 to under $4,000, after just a few weeks prior trading well above $10,000. The more than 60% fall came to a climax on March 12, 2020.
All markets felt the sting of the panic and mad dash into the safe haven of cash. However, after that day, markets rebounded into a V-shaped recovery. Bitcoin and the S&P 500 set a new high in 2020, but the Dow Jones failed to put in a higher high which could be more foretelling about the overall state of the US economy.
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Although asset valuations across major stock indices and crypto assets are back at, or close to 2020 highs, the uncertainty around the election has investors taking a pause. Analysts and economists claim upside is limited in stocks, and various technical indicators point to a long-term top potentially being put in on the stock market.
Bitcoin following Black Monday price pattern from 1987 | Source: BTCUSD on TradingView.com
Weakness in stocks and the tech bubble finally popping could cause an anniversary selloff on the 33rd year since the Black Monday collapse in 1987. That day the S&P 500 saw a historic collapse, and it could happen again. According to a chart shared on Reddit, the S&P 500 is closely following the same pattern and price action that led up to that day.
And due to the ongoing correlation between crypto and stocks, even Bitcoin is following this pattern.
Crypto’s Continued Correlation With Stocks Could Spell Disaster
Since Black Thursday, the correlation between the top crypto asset and the most popular stock index in the United States, have traded lock and step. Bitcoin spent its entire life up until this year being positioned as an uncorrelated asset, but overall market sentiment matching across stocks and crypto has the two assets classes matching eerily closely.
Because Bitcoin remains so tightly correlated to the S&P 500, any steep selloff in stocks, either today on the dark day’s anniversary or in the near future, the cryptocurrency could also be in trouble again.
Cryptocurrency's sudden correlation with the S&P 500 stock market index | Source: SPX on TradingView.com
Top crypto fundamental experts claim that Bitcoin will soon decouple from stocks due to the growth of the underlying network. Fundamentally, Bitcoin has never been stronger than before, while stocks are fundamentally at their weakest in years due to the current economic conditions.
If stocks do collapse and Bitcoin withstands, the decoupling could lead to stock market capital flowing into crypto, and further push the asset to never before believed heights.
Featured image from Deposit Photos, charts from TradingView.com
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