Traders Endure Biggest Crypto Liquidation Cascade In History!

IN THIS ISSUE

  • Traders endure the biggest crypto liquidation cascade in history!
  • Binance U.S. hires former top bank regulator
  • Total Altcoin MC breaches $1,000,000,000,000
  • Heatmap: $LINK

 

Analysis by @RandomTask555

Well, we got the “Darth Maul” death wick I was worried about last week but not until the evening hours of Saturday, two days following the NASDAQ $COIN listing. Over $10,000,000,000 in liquidations occurred in what amounted to the single largest liquidation cascade in Crypto market history. Despite the vast size of this liquidation event, the overall impact on the market was far less concerning than the March 2020 event.

This is partly thanks to the increase in overall liquidity and improvements in exchange technology. Some exchanges fared better than others, with FTX appearing to lead the pack in terms of user protection. The most savage wick in the market appears to have occurred on Binance’s REN/USDT pair that dropped all the way to $.01, wiping out the entire margin book.

This was a stark wake-up call to traders who live on margin trading and/or cross leverage. If you fail to manage risk and fully understand the collective risk of each position you’ve put on, the losses that occur during a drop like that can spell disaster.

“MANAGE RISK” Needs to be the first, second & third rule when it comes to trading! Our goal should be to make sure we can always play the game again tomorrow. This will not be the last, and likely not the largest Open Interest wipeout we’ll see this year.

Drops in price such as this, historically have shocked the market into a state of consolidation, which is what I’m seeing in the charts in the days since. Zooming out to the weekly, you can see that the move wasn’t very significant on the HTF’s. But on lower timeframes, this move was nothing short of gut-wrenching for anyone who’d recently put size on the long side.

In other news, CZ of Binance announced today that Binance U.S. has hired a new CEO by the name of Brian Brooks. Former acting head of Office of the Comptroller of the Currency under Trump, Brooks is a top bank regulator. This hire markets another big push by the world’s largest cryptocurrency exchange to cement regulated crypto products on the world stage.

The US has been a hard nut to crack from a regulation standpoint but hires like this one and Coinbase’s new VP, Brett Redfearn who was the SEC’s top regulator for stock exchanges, point to a continued effort to get ahead and stay ahead, of emerging cryptocurrency regulations.

The true flood gate opening will occur when a certain threshold of transparency and regulation arrives at the top exchanges around the world. There is a swath of capital sitting in the wings, that is waiting for such a moment. I have no doubt that moves like the ones Binance and Coinbase recently made will push the cryptocurrency industry ahead and ultimately bring about even more usage and adoption in the months and years to come!

 

BTC/USD Weekly

The break to new highs was short-lived for Bitcoin. In the short term, the Coinbase direct listing event proved to be a sell the news event after all. We should get a squeeze upwards this week, regardless of what comes in the mid-term. I’ll be watching for signs of rejection/weakness in the area between $58,000-$60,000. This will be a key area to regain if the bulls are hoping for a strong continuation from here.

 

BTC/USD 12 HR

Otherwise, we may be looking at a consolidation/range bound $BTC that could be setting up for the inevitable tag of the 20-week MA that I’ve been tracking for the past few months in the newsletter. At the time of writing the 20-week MA is sitting around $44,295 and is climbing around $1,400 each week.

 

ETH/USD DAILY

Ethereum is looking much stronger in comparison, which is not surprising given the breakout we witnessed on the $ETHBTC pair last week. Gas fees are sky-high again though, costing smart contract traders north of $100 USD per transaction at time of writing. The $ETHUSD daily actually looks really strong with today’s bounce pushing price back above $2,200.

Price never closed a daily candle below the recent S/R level which makes it hard to remain anything but bullish on the king of the altcoins!

ETH/USD WEEKLY

Last week we saw renewed interest from bulls on the volume indicator. A tag of the 8.77 Chaos PRZ on bearish divergence gives me some pause, but the weekly close, despite the events of Saturday night wasn’t actually too bad.

This weekly close will be another to keep a close eye on. The bulls have their work cut out for them this week!

 

ETH/BTC WEEKLY

$ETHBTC enjoyed a strong week, barely flinching in the wake of the liquidation cascade on Saturday night. Price has made a clean break above weekly support and looks primed for continuation. This should bode well for the recovery of alt vs. BTC pairs in the mid-term.

 

BTC DOMINANCE

BTC dominance nearly tagged the HTF .618 fib that I’d originally marked as a “peak alt season objective”, however now that we’ve arrived, I hardly see any evidence of altcoin euphoria. Most pairs have barely broken out of previous ranges, and some are only just beginning to break out of accumulation bottom ranges.

This has forced me to reconsider my thesis that a 50% BTC dominance market will be the level to aim for this year. I got to wondering if perhaps I had it all wrong and in fact, the future of cryptocurrency will see a significantly lower % of Bitcoin dominance.

Whether we bounce here or not, I can’t count out the possibility that BTC dominance will make new all-time lows, somewhere in this cycle, perhaps eventually breaking down below the 35% record-setting low that marked the Altcoin peak in early 2018.

 

ALTCOIN & DEFI PERP

The Altcoin perp printed a Doji on the weekly last week, which marks indecision in the market and likely just a rest stop during what has been an incredibly strong uptrend this year. We don’t want to see this week close below $4,000, that would confirm a 3-candle fractal top and likely spell trouble for the remainder of Q2. More doji’s or slow trickle in either direction and we’re probably fine here.

 

 

I’m seeing a weaker, but similar view on the DeFi Perp as top DeFi coins struggle to break out for now. No real change here and price is still trading above previous consolidation.


TOTAL ALTCOIN MARKETCAP

The total altcoin marketcap in USD finally did it! It cracked the $1 Trillion mark and continues to look strong in this uptrend, sitting at around $950 Billion at the time of writing. The two Chaos PRZ’s I’m watching for this cycle are lurking above at $2.03T and $3.88T respectively. Don’t be surprised if one or both of these levels see some action sometime this year.

 

The Heatmap: Chainlink (LINK)

$LINK broke into price discovery last week vs. USD, and along with most of the market, was swiftly smacked down in the wake of the liquidation cascade. The price action on both the BTC and USD looks very strong on the daily. A clean bullish retest vs. USD and a strong bounce vs. BTC after a clear breakout on buy volume suggests that more price discovery could be imminent.

The Chainlink team has done an incredible job of growing their network with what seems like 1 or more new partnerships being announced each week. Don’t be surprised if you hear more about this name in the coming weeks. The Link Marine Army is not one to remain silent when LINK hits the leaderboard!

 

I’ll continue to keep you updated on all the hottest opportunities I can find in the space, until next time, have a great week, and whatever you do, always play from a position of strength!

If you’d like to get The Weekly delivered straight to your email (FREE), you can sign up here.

If you haven’t already, you can follow me on Twitter @randomtask555 & subscribe to our Youtube Channel here: youtube.com/c/Hxrolabs.

 

Disclaimer:

The following commentary is provided for informational purposes only and may not represent the views of Hxro Games Ltd. or its affiliates, and should not be viewed as legal, tax, investment, financial or other advice. Digital asset transactions are inherently risky, and you are fully and solely responsible for evaluating your purchasing decisions at your own risk. Past performance is not indicative of future results.

©2021 by Hxro Labs

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