(Kitco News) - The pain continued for a second day in the crypto market on Wednesday – with no relief in sight – as the ongoing collapse of the cryptocurrency exchange FTX has initiated the second major contagion event for the asset class in the past seven months.
Losses have been widespread across the market with virtually no token left unscathed as the fall of one of the largest exchanges in the space has pushed investors into the safety of stablecoins until volatility diminishes and some semblance of stability is achieved.
Data from TradingView shows that an early-morning attempt to push Bitcoin (BTC) through resistance at $19,000 was soundly rejected by bears, who pushed the top crypto to a new yearly low of $15,845 in afternoon trading as rumors that Binance would not be acquiring FTX began to circulate on social media.
BTC/USD 4-hour chart. Source: TradingView
The struggle for bulls to generate any sort of momentum was noted by Kitco senior technical analyst Jim Wyckoff, who highlighted that “Bears have quickly gained technical power to suggest still more downside price pressure in the near term.”
The downturn has turned into a positive development for some markets – especially precious metals – as Tuesday’s turmoil in the crypto market has “spilled over into safe-haven buying in gold and sharply boosted the yellow metal’s and silver’s prices,” Wyckoff said.
“The cryptos are just like other markets,” Wyckoff added. “When a crisis of confidence occurs, traders and investors all running for the exit door at the same time creates a severe liquidity crunch,” which is evidenced by the widespread declines witnessed on Wednesday.
As for what comes next, Rekt Capital posted a chart detailing the recent price drop into an area first noted by the analyst back in May.
BTC/USD 1-month chart. Source: Twitter
“Months later and BTC has reached this green area,” Rekt Capital said, adding that there is “Still [a] possibility for downside towards the ~$15500 level, with scope for downside wicking to as low as the orange ~$13700 level if things get even more extreme.”
When it comes to what price levels to keep an eye on in the event that the crypto market is able to reverse course from the current weakness, well-known author and trader Peter Brandt posted the following tweet outlining the levels that would “negate the bearish implications.”
These are the key levels that would, if exceeded, begin to negate the bearish implications of the daily and weekly charts $BTC pic.twitter.com/jPXR2j2KgT
— Peter Brandt (@PeterLBrandt) November 9, 2022
Financial markets take a hit
As the FTX saga began unfolding on Tuesday, traditional markets initially withstood any downturn to close the day in the green. That changed on Wednesday as the continued weakness – which led to a new two-year low in BTC – finally hit the stock market and pushed assets into the red.
Mike McGlone, the senior macro strategist for Bloomberg Intelligence, highlighted this possibility in an early-morning tweet that warned the contagion could soon spread to other markets that have been under pressure in 2022.
This Bitcoin, Crypto Slump May Trigger Macroeconomic Dominoes - The breakdown of #Bitcoin and #crypto assets may trigger capitulation sell stops in most markets that have been under pressure this year. pic.twitter.com/p2Uq5pSJye
— Mike McGlone (@mikemcglone11) November 9, 2022
In the extended analysis from McGlone, the strategist warned of the possibility that Bitcoin could revisit support at $10,000, and that the “macroeconomic dominoes may be more significant.”
At the close of markets on Wednesday, the S&P, Dow and Nasdaq all finished in the red, down 2.08%, 1.95%, and 2.48%, respectively.
There were no notable gainers in the top 200 tokens.
Daily cryptocurrency market performance. Source: Coin360
The overall cryptocurrency market cap now stands at $821 billion, and Bitcoin’s dominance rate is 38.3%.
