Bitcoin continued to slip lower after Bitcoinist’s previous market update.
The cryptocurrency slipped from the $9,500 support where it was attempting to hold to a low of $9,070 on major exchanges. This means that from the daily high of ~$10,000, BTC has dropped by nearly $1,000 — one of the biggest moves since last week’s $1,500 drop in three minutes.
Altcoins have reflected Bitcoin’s drop, posting losses similar to the market leader.
The majority of the move lower came within the span of a few minutes, suggesting it was a long liquidation event.
Skew data confirms this. The crypto derivatives data tracker reported that in the span of the past two hours, more than $65 million worth of long positions on BitMEX alone were liquidated. This adds to the $17 million liquidated in the five hours before the drop from $9,500 to $9,070.
Thus far, traders seem hesitant to reaccumulate Bitcoin at these relatively low levels. BitMEX’s open interest metric, which tracks the amount of value locked in its futures contract, has yet to recover after the dip.
Bitcoin Closely Correlated With the S&P 500
The catalyst behind this move seems to be a drop in the S&P 500.
The leading stock index, along with its contemporaries in the Nasdaq 100 and the Dow Jones 30, has seen their worse price performances in days. The S&P 500 is down 4.4% as of the time of this article’s writing, with names like Apple, Microsoft, and Amazon dropping.
As Avi Felman of BlockTower Capital observed, “the tick for tick with the SPX is back baby,” referencing how Bitcoin’s chart is dropping right alongside leading stocks.
Tick for tick with the SPX is back baby 🙏🏽
— Avi IS RIGHT (@AviFelman) June 11, 2020
The weakness in the stock market comes in spite of the fact that the Federal Reserve announced that it will likely be keeping rates near or at 0% for the next two and a half years.
It is too early to tell if a bearish trend has formed, but analysts say that the stock market has sentimental signs of a top. They reference how their family and friends have suddenly become interested in stocks while bankrupt companies like Hertz are rallying hundreds of percent, suggesting that assets are reaching an exhaustive point in their rallies.
Should stocks plunge yet again, Bitcoin is unlikely to benefit. As Arthur Hayes of BitMEX explained:
“Bitcoin will be owned unlevered. Could the price retest $3,000? Absolutely. As the SPX rolls over and tests 2,000 expect all asset classes to puke again. As violent as the Q1 collapse in asset values was, we have almost 100 years of imbalances to unwind the ancien régime.”
BTC Loses Key Support
The bearish sentiment building has been corroborated by technical analysis.
In the wake of the move, a day trader shared that Bitcoin has broken below a “pitchfork” pattern that contained Bitcoin’s price action from the March and April lows.
The loss of this uptrend pattern may be the start of a “much bigger breakdown,” the trader opined.
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Bitcoin Crashes $1,000 in Hours: Here's What Analysts Think Comes Next