First Mover: Bitcoin Drop Below $40K Triggers $3B in Liquidations

PLUS: Bitcoin Breaks Below $42K; Next Support at $34K as Intermediate Trend Turns Bearish

Everything you need to make sense of the crypto markets and beyond By the CoinDesk Markets Team Edited by Lawrence Lewitinn, Managing Editor, Global Capital Markets May 19, 2021 Sponsored by     Bitcoin (BTC) -13.2%  $39,350 Ether (ETH)  -18.6%   $2,849 (Price data as of May 19 @11:00 UTC) If you were forwarded this newsletter and would like to receive it, sign up here.  Good morning. Here's what we're writing about: Market Moves: Bitcoin Drop Below $40K Triggers $3B in Liquidations, Heads for Worst Month in 3 Years Technician's Take: Bitcoin Breaks Below $42K; Next Support at $34K as Intermediate Trend Turns Bearish   Check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Lawrence Lewitinn and Emily Parker, at 9 a.m. U.S. Eastern time. Today the show will feature guests: Todd Crosland, Coinzoom CEO Jules Urbach, RNDR CEO Beeple Benson Durham, Cornerstone Macro Head of Quantitative Global Policy Analytics Biggest Movers These are the biggest movers in the CoinDesk 20 over the past 24 hours:   Gainers: None of the assets in the CoinDesk 20 is up today. Losers:  Cardano (ADA): -19.9% Stellar (XLM): -19.4% Bitcoin Cash (BCH): -18.8% Uniswap (UNI): -18.7% Ether (ETH): -18.6% EOS (EOS): -18.2% The Graph (GRT): -17.7% Litecoin (LTC): -16.6% Algorand (ALGO): -16.1% Yearn Finance (YFI): -15.6% Filecoin (FIL): -15.4% NuCypher (NU): -15.2% XRP (AAVE): -14.4% Tezos (XTZ): -13.9% Bitcoin (BTC) -13.2% Chainlink (LINK): -9.5% Aave (AAVE): -9.4% Polkadat (DOT): -3.7%   The CoinDesk 20 are 20 digital assets filtered from the larger universe of thousands of cryptocurrencies and constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges. Market Moves by Omkar Godbole Bitcoin Drop Below $40K Triggers $3B in Liquidations   Bitcoin tumbled for a fifth-straight day, extending the largest cryptocurrency's losses so far in May to 34%, the most for a single month since November 2018. The full-blown retreat shook out bullish leverage from the cryptocurrency derivatives market, leading to more than $3 billion in position liquidations due to margin calls. At press time, the bitcoin (BTC) price was changing hands around $38,710, the lowest since Feb. 7 – just before tweets by Tesla CEO Elon Musk sent the cryptocurrency's price skyrocketing. Prices hit a record high near $65,000 in April, and recent tweets by Musk that he had concerns over the environmental impact of bitcoin mining appear to have contributed to this month's sell-off.     The top cryptocurrency slipped early Monday below its 200-day simple moving price average (SMA) around $39,825, seen as a key level of support. The average has come into play for the first time since April 29, 2020. Back then, the long-term technical line was located around $7,977.     While bitcoin has shed 15% in the past 24 hours, other top 10 coins such as ether (ETH), internet computer token (ICP), binance token (BNB), cardano (ADA), XRP have suffered more significant losses, according to data source Messari. Amid the market-wide risk aversion, exchanges offering crypto futures have liquidated $3 billion worth of positions, per data source bybt.com. Bitcoin futures account for almost 50% of the total market-wide liquidations.   However, total liquidations seen in the past 24 hours are still just a third of the record $10 billion worth of forced closures observed on April 17, when bitcoin fell sharply from $60,000. Since then, the market has mostly seen daily liquidations of less than $4 billion, barring a spike on April 12. Crypto futures market-wide liquidations (Source: bybt) The data shows the recent decline from $55,000 to below $40,000 is primarily driven by increased selling in the spot market. The number of bitcoins held on exchanges has risen by more than 65,000 BTC in the past seven days, per data provided by Glassnode. Investors transfer coins to exchanges when they want to liquidate their holdings.   The first leg of the ongoing correction – the drop from $60,000 to $52,000 seen in mid-April – was mainly due to the record liquidations. Forced closure of longs added to bearish pressures around the cryptocurrency, leading to an exaggerated price drop.     What's next for bitcoin   The correction could soon run out of steam as technical indicators show oversold conditions. Further, the order book is flashing signs of capitulation, the point at which traders trying to enter longs begin throwing in the towel.   "We are nearing capitulation to the downside," crypto research firm Jarvis Labs noted in a Medium post early Wednesday while drawing attention to the relatively low concentration of leveraged longs at deeper price levels on Binance, the world's largest crypto exchange as per trading volumes.   Binance bitcoin liquidity map (Source: Jarvis Labs)   "The pink bubbles buried underneath the price represent 25x leveraged longs. Red bubbles are 50x longs, which hardly exist, and yellowish-orange are 100x longs, which are virtually non-existent," the medium post said. "Bubbles above the price line are showing not only a large amount of 25x shorts but also 50x and even 100x."   Capitulation is widely considered the final stage of the price sell-off.   However, analysts stand divided on whether the market has bottomed out. Patrick Heusser, head of trading at Swiss-based Crypto Finance AG, told CoinDesk that the market needed a correction, and prices could consolidate at lows before moving higher.   "Our desk is buying the dip," Heusser told CoinDesk.   Stack Funds' COO and co-founder Matthew Dibb said the pullback to the 200-day SMA is nothing out of the ordinary, but a further decline to $30,000 could be seen.   Bitcoin has taken a beating over the past week, falling sharply from over $50,000 to 3.5-month lows under $40,000.   "The BTC enthusiasm has been sucked out last week by the confluence of "Elon's corporate ESG stamp of disapproval, the SEC's public un-enthusiasm for any ETF & the CME backwardation," QCP Capital noted in its Telegram channel.   Tesla's Musk attempted to calm market nerves late Sunday with a Twitter announcement stating that the company hasn't sold its bitcoin holdings. So far, however, that has failed to put a floor under the cryptocurrency. Read the original story here:  Bitcoin Drop Below $40K Triggers $3B in Liquidations, Heads for Worst Month in 3 Years A message from Nexo Your digital assets deserve a savings account in their BEST INTEREST. Leading crypto lender Nexo treats you, your crypto and your fiat to industry-best Crypto & Fiat services, featuring:    * Up to 12% interest on digital assets, paid out daily! * Yields available on BTC, ETH, LTC, BCH, XRP, XLM, EOS, TRX, LINK, BNB, PAXG, USDT, USDC, TUSD, PAX, DAI, HUSD, GBP and EUR. * No minimum or maximum limits on funds deposited, offering infinite opportunities to earn. * #ZeroFees on all transactions. * Military-grade wallet security and top-tier insurance on all custodial assets with SOC 2 Type 2 certified crypto custodian BitGo. Get started at nexo.io Technician's Take by Damanick Dantes Bitcoin Breaks Below $42K; Next Support at $34K as Intermediate Trend Turns Bearish Bitcoin (BTC) sellers are in control as the cryptocurrency broke below initial support at $42,000 on Tuesday. BTC was trading around $39,000 at the time of writing and could see further declines towards the next level of support around $34,000. Price recoveries should remain limited at short-term resistance levels between $42,000 and $45,000. Daily bitcoin chart shows intermediate-term support and resistance levels with oversold RSI (Source: TradingView) The relative strength index (RSI) on the daily chart has been oversold for the past few days. However, an oversold reading of 25 is not as deep as the March 2020 reading around 14, which suggests selling pressure could persist over the short-term. The weekly RSI continues to recede from extreme overbought levels and is not yet oversold. This indicates further selling pressure towards lower support zones. The next level of support is seen around $34,000 which could stabilize the sell-off. The intermediate term trend is shifting from bullish to bearish as price is roughly 20% below the 100-day moving average. Bitcoin is now down about 30% month-to-date and has ended months of consolidation to the downside. Breakdowns typically lead to rising volatility and longer drawdown periods.   Original story found here: Bitcoin Breaks Below $42K; Next Support at $34K as Intermediate Trend Turns Bearish A message from Farsite Ever dreamed of owning a spaceship? It is possible in Farsite - upcoming DeFi powered MMO RTS, where NFTs acquired a new meaning. Designed for Ethereum 2.0, Farsite runs cNFT protocol to allow collateral staking against game assets. Explore a myriad of galaxies in the everlasting search for rare resources, modernize your vessel, and trade assets on the open market. Preorder launches May 31 - join the Airdrop to charter your first spacecraft, traveler, the countdown begins. BOLO Be on the look out for these upcoming events:   14:00 UTC (10:00 a.m. ET): Testimony of Vice Chair for Supervision Randal K. Quarles before the Committee on Financial Services, U.S. House of Representatives. Watch live.   18:00 UTC (2:00 p.m. ET): FOMC minutes to the meeting of April 27-28, 2021 released. A message from CoinDesk Countdown to #Consensus2021 Will bitcoin pump? Is a pullback around the corner? Is ether a better way to position? Next week at Consensus by CoinDesk, our virtual big-tent conference, we help investors hone their skill sets with trading and yield generation strategies. investment theses and market intelligence and get up to speed on crypto market developments. Join our Explorations track "Trade Secrets" with Philip Gradwell of Chainalysis, Matthew Roszak of Bloq, Darius Sit of QCP Capital and more at Consensus by CoinDesk, May 24-27. Register today. ICYMI In case you missed it, here's the most recent episode of "First Mover" on CoinDesk TV:   Gary Vaynerchuk On NFTs, Meme Investing, Elon Musk Serial entrepreneur Gary Vaynerchuk joins "First Mover" to discuss today's hot topics and what's on his mind leading up to his upcoming keynote speech at next week's Consensus by CoinDesk conference. He discusses his new NFT marketplace, the overall NFT opportunity, and his reaction to Dogecoin (DOGE) and other meme investing. Also, Nick Mancini of Trade the Chain provides markets analysis and Figure CEO Mike Cagney on the future of home lending.   A message from CoinDesk Bitcoin Miner Metrics: Hashrate and Thermocap   How is hashrate calculated? What does thermocap represent? What do hashrate ribbons say about bitcoin price cycles? This research note looks at Bitcoin miner metrics and how investors can use them to glean insight into the asset's price and network fundamentals. Download the free report here. Latest Headlines   BlockFi Botches Promo With Outsized Bitcoin Reward Payments The crypto lender is working with clients to recover the overpayments. Bitcoin Plummets to Below $40K The world's largest cryptocurrency by volume has dropped nearly 40% from its all-time high in a month. India's Government May Form Panel to Study Regulating Crypto: Report The news comes amid the view that proposals for a blanket ban are outdated. Egypt's Largest Bank Joins Ripple Network for Cross-Border Payments Egypt is in the top five nations globally in terms of remittance flows from ex-pat communities.       Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. 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