Hello

That was quite a flush two nights ago! Over $300 million in long positions got liquidated as Bitcoin swiftly dropped from $43,000 to $40,400 within seven minutes.

Despite the sudden, drastic movement, the macro landscape remains unchanged. This was simply a shakeout targeting overleveraged traders, as evidenced by the notable absence of negative news regarding crypto. 

On the contrary, some positive developments are worth mentioning, which you can find in our Notable News, Notes, and Tweets section below.

And indeed, while the slip feels steep, it only represents a 7% drop. That’s barely a blip on the radar in the volatile crypto world. Last night, Bitcoin was stopped by the 21-day exponential moving average (represented by the yellow line below), which was acting as support:

Notably, the parabolic curve (blue line) is unaffected by the rapid dip, as evidenced in this chart. 

But most importantly, the macro bullish trend is undisturbed on the higher time frame. This means we are still in a market that’s trending upward. 

However, a deeper correction might start if the $40,000 level breaks down confidently.

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Concurrently, Ethereum tested its support at $2,140 in futures markets, coinciding with eager buyers who front-ran this level on spot markets: 

Both support at $2,140 and resistance at $2,400 remain critical levels of interest for ETH in the near term.

On a broader note, digital asset investment products have experienced an 11th consecutive week of inflows totaling $43 million, with a notable increase in short position inflows prompted by recent price gains and perceived downside risks.

Bitcoin products remain the primary focus of investors, with year-to-date inflows reaching $1.7 billion. Regionally, Europe is still leading with optimism.

Meanwhile, blockchain equities saw their most significant weekly inflows on record at $126 million, according to CoinShares data!

In short, crypto is growing. And it will only get bigger when the bull truly starts its run.

What’s Next

BTC spot ETFs are slated for their next round of approval opportunities within the next 30 days, and the market has displayed significant interest in accumulating exposure to BTC ahead of the anticipated launches.

If you’re looking for weakness to buy additional Bitcoin, just be wary. Savvy investors will look for stronger evidence than intraday price action to determine whether they’re looking at a significant drop or just run-of-the-mill volatility.

The quick dip two nights ago appears to be merely a one-time leverage flush lacking substantial follow-through for now. However, today's CPI readings might bring more volatility.

The conclusion of 2023 promises to be an intriguing one.

Best regards,

Dr. Somto