by Dec 13 (Reuters) – Plucky bitcoin has held steady since it avoided the chaos of the FTX crash, gathering its strength to soar towards the dizzying heights of $30,000 in 2023.
Battered bitcoin hasn’t responded since it was hit by the FTX crash, taking a deep breath before plunging towards the $5,000 depth.
Place your bets, spin the wheel.
The world’s dominant cryptocurrency has certainly been uncharacteristically muted over the past two weeks, treading water between roughly $15,770 and $17,350 in the ominous wake of the FTX-induced mini-market crash in November.
What happens next is anyone’s guess.
“The question we have to ask now is, are there any sellers left in this market? In my view, no, there aren’t many left,” said Jacob Sansbury, co-founder of retail investor services firm Pluto.
Sansbury believes that most of the overleveraged miners, who tend to be large holders of bitcoin, have exited positions to pay off debts incurred with fiat money to finance their equipment and operations.
In fact, bitcoin’s recent lull may be because there are fewer coins to sell: The amount held on exchanges for trading stands at 1.97 million, data from Coinglass shows, down sharply from 2 .33 million at the start of the year.
The main unloading has already taken place; November saw a 7-day realized loss of $10.16 billion in bitcoin investments as investors were forced out of long-term positions, the fourth-largest loss on record since this measure, according to data from Glassnode .
The cryptocurrency has already dropped more than 60% in 2022 and is expected to post its first annual loss since 2018.
Many remaining investors are placing their bitcoins in offline “cold storage” according to on-chain data, which should bolster a price floor of around $16,000, said Bob Ras, co-founder of Sologenic, an asset and trading firm. digital.
“Barring more surprises in the market, it’s hard to imagine BTC going down significantly,” he added.
Ras believes that if it weren’t for the high-profile crashes of cryptocurrency players FTX, Celsius and Terra this year, the price of bitcoin would be close to $25,000 now.
But this is cryptocurrency, and there may be more surprises in store, with a number of potential sell-off triggers on the horizon.
THE TALE OF THE BEAR
The first potential danger is the risk that more bitcoin miners will be forced to sell their holdings to stay afloat as mining becomes increasingly expensive.
“Miners as a group start to become unprofitable below $20,000, so we’re below (that) point,” noted Ben McMillan, chief investment officer at IDX Digital Assets.
CrytpoQuant’s mineral reserve gauge, which tracks the amount of bitcoin held in miners’ wallets, has declined by about 7,722 bitcoins since November.
Market participants also pointed to concerns over the Grayscale Bitcoin Trust, (GBTC.PK), the world’s largest bitcoin fund with $10.9 billion in assets. Parent company Digital Currency Group, which owns Genesis Trading, owes $575 million to Genesis’ cryptocurrency lending arm, the DCG CEO told shareholders on Nov. 22.
Grayscale Bitcoin Trust’s discount to its net asset value is at an all-time low of 48%, and the shares haven’t traded at a premium since March 2021, data from Coinglass showed.
DCG last month said problems in Genesis’s lending business had no impact on DCG and its subsidiaries, while Grayscale said it was normal and its underlying businesses were unaffected.
“This could be the other shoe to drop,” McMillan said, referring to the possibility that Grayscale has financial problems. “That said, if bitcoin can hold the $15,000 line during the DCG training, that would be a strong indicator for 2023.
A more aggressive-than-expected Federal Reserve at its final meeting of the year on Wednesday could further erode risk appetite and bitcoin’s outlook, crypto watchers said.
GET TECHNICAL
Scenarios of bitcoin leapfrogging to $30,000 or crashing to $5,000 in 2023 were long-term possibilities reported by VanEck and Standard Chartered, respectively.
When it comes to the technicals, several analysts have pointed to indicators that show bitcoin may have found support between $16,000 and $16,800.
The cryptocurrency could also encounter resistance around the $17,490 level, said Eddie Tofpik, head of technical analysis at ADM Investor Services, warning that any longer-term rally was likely to be challenging.
“Every time we see a rally, it’s one step up and then two or three steps down,” he said.
Vetle Lunde, analyst at Arcane Research, said long-term bets could be tempting in the wake of November’s turmoil.
However, uncertainty reigns.
“Keep in mind that massive downturns tend to be followed by a long-lasting directionless market filled with apathy and unfathomable second thoughts,” Lunde added.
Reporting by Lisa Pauline Mattackal and Medha Singh in Bangalore; Editing by Pravin Char
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