Bitcoin and the wider crypto market have been absolutely ravaged from the FTX collapse fallout. In this huge washout, the entire industry needs to take a step back and assess what it truly values. Back to basics. Back to Bitcoin. Back to Ethereum. Back to self-custody.
The information contained here is for general information only. It should not be taken as constituting financial advice. Stormrake is not a financial adviser. You should consider seeking independent financial advice prior to making any personal investments.
Return To Safety
The sheer level of fraud and depravity from the FTX collapse is yet to be fully understood, whilst a number of other exchanges are feeling the heat from their own liquidity crunch. Understandably, this has caused a significant amount of weakness in the markets and they appear unable to catch a bid.
This fear and confusion has muddied the investing waters causing traders and investors to paint all assets, from defunct tokens such as FTT and LUNC all the way to Bitcoin and Ethereum with the same brush.
It's important to note in all this chaos, the value of permissionless, self-custodial and sovereign assets such as Bitcoin and Ethereum will still exist. They existed long before FTX defrauded customers and rehypothecated their deposits and will continue to exist long after their bankruptcy filing is but a footnote in crypto's history.
This fear and confusion has muddied the investing waters causing traders and investors to paint all assets, from defunct tokens such as FTT and LUNC all the way to Bitcoin and Ethereum with the same brush.
It's important to note in all this chaos, the value of permissionless, self-custodial and sovereign assets such as Bitcoin and Ethereum will still exist. They existed long before FTX defrauded customers and rehypothecated their deposits and will continue to exist long after their bankruptcy filing is but a footnote in crypto's history.
To anyone who is interested in learning about how to self-custody their own digital assets, please feel free to reach out via live chat, email or give us a call to get you up and running with your own hardware wallet. Education is key to making it past this dour situation.
Crypto Contagion
Back in May/June 2022 during the collapse of LUNA, Celsius and Three Arrows Capital, we had seen the total crypto market drop by 50%. If we see a similar collapse in valuations across the board, the total market cap can end up sub $500 Billion USD. At that valuation, prices on Bitcoin and Ethereum would be approx. 30% lower from current levels.
There are a number of exchanges who are experiencing a fresh set of bank runs as customers justifiably reduce their exposures to centralised exchanges. Some are not just withdrawing their crypto, they are selling and withdrawing fiat in order to flee to perceived safety.
We need to reasonably assume that there is more downside risks to come as the full breadth of the "FTX contagion" comes to be understood. Once the sell-off has completed and risks are known, we will cautiously explore bidding and look to form a bottom.
There are a number of exchanges who are experiencing a fresh set of bank runs as customers justifiably reduce their exposures to centralised exchanges. Some are not just withdrawing their crypto, they are selling and withdrawing fiat in order to flee to perceived safety.
We need to reasonably assume that there is more downside risks to come as the full breadth of the "FTX contagion" comes to be understood. Once the sell-off has completed and risks are known, we will cautiously explore bidding and look to form a bottom.
BTC/USD key levels
Bitcoin is looking to hunt and test the local low that was set at $15,588 USD. Should it break and close below this key level, then the next major level of support kicks in at $14,444. A particularly aggressive sell-off as market uncertainty ramps up a notch, can have us printing fresh lows for 2022 with support coming in at $13,600. For any sort of recovery, we need to see BTC reclaim $16,500, if it manages to do so then we can expect a retest of $18,217.
ETH/USD key levels
Ethereum has held up surprisingly well in this chaos and currently trades at its key level of $1,190 USD. Should it close below $1,190 on the daily chart then we can expect a quick move down to the $1,000 - $1,071 pocket. A severe enough correction, if we close below $1,000 will have us retesting the 2022 lows of $885. Reclaiming $1,190 by close of trading today will set us up for a move towards $1,333. A strong enough move can have us retesting $1,472 by close of trading this week.
No Advice Warning
The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.
Stormrake is not a financial adviser and does not provide financial product advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Stormrake is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by this newsletter.
Disclaimer
All statements made in this newsletter are made in good faith and we believe they are accurate and reliable. Stormrake does not give any warranty as to the accuracy, reliability or completeness of information that is contained here, except insofar as any liability under statute cannot be excluded. Stormrake, its directors, employees and their representatives do not accept any liability for any error or omission in this newsletter or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided in this newsletter is owned by Stormrake. You may not alter or modify this information in any way, including the removal of this copyright notice.Copyright © 2022 Stormrake Pty Ltd, All rights reserved
