Bitcoin tests $90,000 amid liquidity concerns and Wall Street selling

On the morning of November 18, the Bitcoin (BTC) price fell below $90,000, deviating more than 29% from the all-time high of $126,200 reached in October.

The bulls subsequently managed to recapture a significant level, triggering a wave of short-covering by intraday traders. At the time of writing, digital gold is trading at $91,130, according to CoinGecko.

BTC/USD Hourly Chart. Source: TradingView.

Related: Crypto funds recorded their largest outflow since February — CoinShares

Factors of decline

The negative trend continues amid doubts about the Federal Reserve's willingness to cut its key interest rate at its December 10 meeting. The probability of such an outcome is 48.6%, compared to 93.7% a month ago, according to CME FedWatch. Earlier, Federal Reserve Chairman Jerome Powell warned that such a scenario was “not guaranteed.”

The ADP private sector payrolls report will be released today at 13:15 UTC. The US Labor Department will release official figures on Thursday, November 20. A worsening figure could prompt a reassessment of possible monetary policy actions in December.

The situation on the US stock market is also putting pressure on cryptocurrency prices. Yesterday, news broke that Peter Thiel had unloaded all of his positions in Nvidia, heightening concerns that Wall Street is overbought due to stocks linked to the AI ​​boom. Softbank, another key Wall Street investor, had previously taken a similar step. Such concerns could persist until the chipmaker's earnings report on November 19, after the close of trading.

Liquidity indicators also remain unfavorable, as evidenced by reverse repo data. The end of the government shutdown is expected to lead to a resumption of federal spending in the US, which could theoretically improve liquidity in the financial system and, all other things being equal, drive “technical” demand for digital assets.

At the same time, the worsening market conditions prompted Strategy to buy Bitcoin. The day before, Michael Saylor's corporation announced the acquisition of 8,178 BTC at an average price of $102,171 for approximately $835.6 million. This significant deal was made possible by raising $715 million from the sale of STRE preferred shares in Europe.

On November 18, El Salvador announced its first cryptocurrency. An additional 1,090.19 BTC worth $100.3 million arrived in the state's wallet.

On the topic: Long-term market fundamentals remain strong despite correction — Bitwise

On-chain painting

At the same time, the on-chain picture is becoming more favorable. Yesterday, CryptoQuant recorded an increase in stablecoin inflows to Binance over the past 30 days, reaching $9 billion. Such levels have only been seen a few times since late 2021, and often preceded major price fluctuations.

Glassnode detected a shift in Bitcoin whales from selling to buying. On November 17, the number of addresses with balances over 1,000 BTC reached a four-month high (1,384). On October 7, the metric fell to a yearly low of 1,354, when the asset was trading at $114,000. Since then, the indicator has risen 2.2% as the price of digital gold continues to fall below $90,000.

On the topic: Wintermute names factors driving cryptocurrency market recovery

Opinions

According to CryptoQuant analyst Axel Adler Jr., the market is at a crossroads.

Source: Axel Adler Jr.

The direction will depend on whether he can hold on to three main lifelines:

• “fair value” of $87,000;

• “BTC-ETF average buy level” at $79,000;

• “lower limit of the short-term trading range” at $74,000.

Source: Axel Adler Jr.

Holding these levels would indicate that the current pullback could be merely a deep “shakeup” within a bull run. A breakout, however, would signal a more significant correction or even the start of a bear market.

According to Chain Catcher, a price drop below $88,000 would trigger $829 million in long liquidations on key exchanges, based on Coinglass calculations. A breakout below $91,000 would result in $702 million in short liquidations.

Earlier, trader Anatoly Radchenko commented to Cointelegraph RU that he expected Bitcoin to return to $70,000-$75,000 within the next four to five months—the range prior to Donald Trump's victory in the US presidential election in November 2024. The expert cited the lack of liquidity for a pump, which could protect the market amid increased activity and selling of coins from “old wallets.”

On topic: the shutdown is over. What will revive the cryptocurrency market?

Source: cryptonews.net