Bitcoin Bears Bruising Beatdown

26.10.22 12:55 AM By Stormrake

Just over $328M USD worth of short liquidations got triggered by Bitcoin moving over $20,000. Across other crypto assets over $700M worth of short liquidations has been doled out to the bears. Let's dive in and see where this short squeeze can take us.

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.

Pain & Punishment

As a Bitcoin perma-bull, 2022 has seen its fair share of bull butchering events and has certainly tested the resolve of Bitcoiners and crypto investors alike so please forgive my gloating. Today was the single largest liquidation event on FTX in its history and the runner up isn't even close. Approx. $600M USD got wiped, mainly from shorts as 87.67% of the total liquidation event came from the bears. Across the wider crypto space, well over $800M got liquidated, with almost 86% of that coming from shorts. Prices have started to normalise following this wrecking ball of liquidations, with further upside anticipated if certain key levels can hold and the liquidity faucet gets opened up by the US FED.

Revenue - Back On The Menu

The beleaguered crypto ecosystem is starting to show some signs of on-chain life, as fees and revenue over the last 24 hours have started to pick up. This is critically important and a high quality signal, as users are willing to transact on-chain and pay fees. That gives us an indication that the ecosystem is still operating despite a reduction in valuations. The DeFi, trading and derivatives sectors of on-chain markets have been particularly busy as speculators begin to build their positions and regain confidence. What has been particularly impressive is how quickly Total Value Locked (TVL) has picked up. The ETH chain for example has risen back over $30B TVL. Keep an eye on the Layer Twos, as they are steadily gaining market share from ETH, as we have recently seen Arbitrum crack past $1B in TVL.

BTC/USD key levels

Bitcoin has finally breached the $20,000 USD level. The sharp rise we had seen in prices had us almost retest our key level of $20,554, this will prove to be the first bullish retest for Bitcoin. If we can push past $20,554 then the next level up will be $21,761 which would provide us with a tidy 8% lift from current prices. To the downside we have to watch for a fade back below $19,560, should this occur we can anticipate a breakdown to $18,549. What is most likely to occur now though, will be settlement of prices around the $20,000 level and the same sideways price action we have seen in the past few months.

ETH/USD key levels

Ethereum has had a much stronger lift in prices relative to BTC, up over 8.5% for the day so far. This strength has ripped through most of our key levels with ease and almost retested our key level of $1,555 USD. We currently trade around the 2018 All Time High key level of $1,472. If it manages to hold the 2018 ATH, a run up to $1,721 cannot be ruled out. To the downside, if we fall back below $1,400 then it's back to the magnet of $1,333. A reversal can also have us retest $1,241 before finding meaningful support.

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.

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