Disclaimer

This is not financial advice and should not be taken as such. This is merely an opinion article.

Introduction

Bitcoin Slump

Bitcoin Slump Triggers over $250M in Liquidations as investors grow concerned about FOMC Meeting and CPI Report

The cryptocurrency market witnessed a significant pullback on Tuesday, with Bitcoin (BTC) dipping to near $66,000. The sudden decline triggered over $250 million in liquidations of leveraged derivatives trading positions across all crypto assets.

Bitcoin started the day trading near $70,000 before hitting a three-week low price at $66,170 during the US session. It slightly rebounded to near $67,500 but was still down nearly 5% over the past 24 hours. Altcoins saw even deeper pullbacks during the same period, with the broader altcoin market down significantly today, with some meme coins like FLOKI and BRETT decreasing by more than 11% .

The sudden pullback is attributed to investors "de-risking" from crypto assets ahead of tomorrow's May Consumer Price Index (CPI) report and Federal Reserve meeting. This is a common phenomenon during the days before and hours after the CPI report gets released with both May CPI data and the FED's interest rate decision poised to move the Stock market which in turn will move the cryptocurrency market. 3.4% inflation is predicted so any variation away from that may cause positive or negative impacts on the market depending on the direction.

Despite short-term movements, Analysts believe this might be a good opportunity to accumulate coins. Depending on the direction of the CPI it may cause another dump to occur which will leave a lot of altcoins severely lower in price than last week. Wevr believes this is a crucial time to keep track of onchain market movements and whale buying, As the market will move depending on their decisions. Check out footprint for whale wallet tracking. Bitfinex derivative markets are also a good reference point to see if whales are net long or short.

Market Observers Note Positive Signs

Some positive signs emerged during the sell-off that could point to a quick recovery. Bitcoin saw multiple pullbacks this year before FOMC meetings only to reverse the move soon after which may bode well and a sign that usually whales are overly cautious when it comes to FOMC meetings.

How many times can bitcoin sustain losing $70,000 support

Bitcoin has displayed unprecedented price action in 2024 by hitting all-time highs before the halving event and rising more than 45% year-to-date. A series of rejections from the $72,000 level has left market participants wondering whether the flagship cryptocurrency has reached its cycle top.

At the time of publication, BTC price is trading 10% below its all-time high of $73,835 and has dropped 7% from its local top around $72,000. Some analysts are now convinced that the cryptocurrency will descend into the $60,000 to $65,000 range.

100-Day EMA Provides Last Line of Defense for Bitcoin

From a technical point of view, Bitcoin's price was sitting on immediate support at $65,000. Losing this support may cause the price to drop from the current levels, collecting demand-side liquidity below it toward the 100-day EMA, currently at $63,921. Figure 1 off-chain 100 day moving average Bitcoin price

The 50-day EMA sits within Bitcoin's key support zone between $64,800 and $66,981. After being held in March, this support preceded a 14% surge in price to $72,777 on April 8. So it is crucial to hold these levels or a free fall into the $50,000s may occur

Figure 2 off-chain 50 day moving average Bitcoin price

Since this area provides relatively strong support for the BTC price compared to the resistance it faces in its recovery path, it could be where the downside is capped for the short term unless large liquidations break support.

Overall, market observers are bracing themselves for a volatile session on Wednesday as traders await the FOMC meeting and CPI report. The stage is set for a frantic macro-Wednesday, with both May CPI data and the FED's interest rate decision poised to move the market.

Figure 3 Active Daily Addresses Bitcoin

As seen in Figure 3 there was a spike in active addresses on the 9th of june however nothing else other than the continued downtrend in active wallets since the bitcoin runes and ordinals trend have slowed in popularity. The active address spike may not be attributed to the recent dumps however the downtrend in onchain activity is worrisome for potential bitcoin price increases for the rest of this cycle.

Conclusion

The cryptocurrency landscape remains ever-fluid, presenting unique opportunities and potential pitfalls for investors. As market dynamics shift, the need for timely and insightful information becomes paramount. At Wevr, we are committed to providing our users with cutting-edge tools and comprehensive market insights to aid in making informed investment decisions during these volatile times.

Bitcoin's recent price action underscores the importance of monitoring key support and resistance levels and staying attuned to macroeconomic indicators such as the CPI report and FOMC meetings. The current market scenario emphasizes the critical role of onchain analytics and whale tracking in understanding market movements and sentiment which can be viewed on wevr.

We encourage our clients to leverage the extensive resources and educational materials available at Wevr. These tools are designed to help navigate the complexities of the crypto market, ensuring that investors can make strategic decisions to optimize their portfolios. For example check out our recent Eth gas fees break down

Stay ahead of the curve by visiting Wevr and exploring our range of services tailored to enhance your trading strategies. Join our community on Twitter and keep up with the latest insights and updates on our Crypto insights blog. With Wevr, harness the power of blockchain technology and maximize your investment potential in this dynamic and evolving market.