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The crypto market entered the second consecutive day of major correction with Bitcoin bleeding heavily. Even though Bitcoin has corrected a staggering 47% from its all-time high of $69,000, here’s why we should still wait and not jump right in to buy BTC.
Despite Bitcoin’s sharp correction last week, the open interest (OI) of Bitcoin futures contracts continues to remain high. Historical trends suggest that unless Bitcoin OI turns neutral or turns negative, we may not be done with the correction.
On the technical chart too, Bitcoin closed daily below $36,500. This is the lowest daily close since July 25, 2021. Twitter account BTC Ninja writes that Bitcoin closed below 0.789 FIB. Hence, we can expect even more crashes when Bitcoin will hit 33K and even lower.
The Surrender of Miners
Bitcoin miners have accumulated a lot thus far during the recent correction. The data shows that miners have accumulated over 6000 BTC in the past two weeks as BTC corrected from $45,000 to $38,000.
But now we are getting very close to the production cost of a BTC miner of $34,000. Now, if BTC price continues to correct further, we could see a sharp sell-off and capitulation coming from Bitcoin miners. Last week when BTC was trading around $42,000, crypto analyst @venturefounder wrote:
“The worst drop that Bitcoin has ever had was due to the capitulation of miners (in December 2018, March 2020), when BTC fell below the cost of production, the main cause of this behavior. Miner selloff
Bitcoin to Nasdaq Link Hits New ATH
We know that the current correction in crypto is coming after a larger sell-off in the US stock market. Renowned market analyst Will Clemente writes:
“This week, Bitcoin’s correlation with Nasdaq hit an all-time high. Currently, there’s no catalyst to cause BTC native outflows, it’s just following risk-free behavior from equities. have a high beta.”
On the other hand, the S&P 500 broke below the 200-DMA. It could lead to more liquidations in the crypto space, which in turn will likely create a Ripple effect in the crypto market. Along with Bitcoin, altcoins have also entered a devastating correction.
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