Following a 5% drop on Tuesday, Bitcoin BTC/USD is down 0.3% to $61,680 on Wednesday afternoon, with analysts cautioning traders about potential further downside if key support levels don’t hold.
What Happened: Alex Kuptsikevich, senior market analyst at FxPro said a technical factor added to the selling: the day before, BTCUSD had fallen below its 200-day moving average, reinforcing the exit of ‘weak hands’ from the asset.
Experts are closely watching the $60,918 level, which represents the 21-week moving average.
According to a report, if Bitcoin trades below this level, traders should consider reducing their long positions.
The cryptocurrency market as a whole has seen a significant correction, with the total market capitalization dropping 4.2% in the last 24 hours to $2.16 trillion.
Ethereum ETH/USD, the second-largest cryptocurrency, is down 1.5% at $2,449.
“Bitcoin found local support as it approached its 50-day moving average just above $60.3K. Geopolitics seem to have interfered with the bullish trade, pushing Bitcoin away from the upper boundary of the multi-month channel,” Kuptsikevich said in a note to Benzinga.
The market downturn coincides with escalating geopolitical tensions in the Middle East.
The Israel Defense Forces (IDF) reported that over 100 missiles have been launched into Israel from Iran, with sirens sounding in Tel Aviv and Jerusalem.
This geopolitical unrest has impacted not only cryptocurrencies but also traditional markets, with Kuptsikevich noting, “Cryptocurrencies took a hit along with risk assets, while the dollar, gold and oil rose sharply.”
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Why It Matters: The recent price action has also affected Bitcoin and Ethereum spot ETFs.
On Oct. 1, Bitcoin spot ETFs experienced a total net outflow of $243 million, marking the first net outflow after eight consecutive days of inflows.
Fidelity‘s FBTC saw an outflow of $144 million, while ARKB outflowed $84.35 million.
BlackRock‘s IBIT ETF, however, saw an inflow of $40.8 million, according to data from SoSo Value.
Ethereum spot ETFs also faced outflows, with a total net outflow of $48.5 million on the same day.
ETHE and FETH experienced outflows of $26.6 million and $24.9 million respectively.
Despite the current market turbulence, some analysts remain optimistic about the long-term prospects of cryptocurrencies.
Samir Kerbage, Chief Investment Officer at Hashdex, highlighted the growing political significance of crypto: “Crypto being part of the political conversation, especially coming from vice-presidential candidates in the United States, is a positive development. It’s a big step forward compared to a year or 18 months ago.”
Kerbage also emphasized the emergence of the “crypto voter” and its potential impact on the upcoming U.S. elections.
“This growing political influence is something I wrote about earlier this year, and I continue to believe that this technology, like the internet, is not political by nature and will over time become less partisan,” he said in a note to Benzinga.
What’s Next: As the crypto market navigates through these uncertain times, investors and enthusiasts alike are looking forward to events such as Benzinga’s Future of Digital Assets on Nov. 19.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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