Bitcoin’s 2% crash wipes $4.21 billion in OI and handicaps altcoins, what’s next?
- Bitcoin price triggered a quick 2.05% downtick on Friday.
- Despite being a small downturn, altcoins took a massive hit and are down by double digits.
- BTC’s uncertainty has created a dilemma on whether they should buy the dip or sell.
The cryptocurrency market has been extremely sensitive to Bitcoin (BTC) price moves lately. The recent crash caused altcoins to register double-digit losses. While some argue this could be a good opportunity to buy the dip, others warn of an impending sell-off.
Also read: Bitcoin sets the stage for a potential “destruction of fiat currency“
Understanding crypto market outlook
Bitcoin price moves have been key in controlling the crypto market sentiment. But lately, the altcoin sector has become extremely sensitive to pioneer crypto. On Friday, BTC shed 2.05%, which caused major altcoins to slide 20%.
Altcoin performance
Due to this highly sensitive connection between BTC and altcoins, the Open Interest (OI) dropped from $50.93 billion on Thursday to $46.85 billion on Sunday. This drop indicates that $4.21 billion in OI was wiped due to the move on Friday.
Crypto market OI
As a result of Friday's market crash, $300 million worth of positions were wiped out. Of this, $254 million belong to the bulls.
Total liquidations
Read more: Bitcoin Weekly Forecast: BTC struggles, but $80K is at striking distance
What to expect next?
The altcoins are clearly looking to Bitcoin for directional bias, so let’s understand where BTC stands. As explained in previous FXStreet publications, BTC’s short and long-term market structure remains uncertain.
Crypto analyst and influencer Cold Blooded Shiller posted a tweet simplifying BTC's directional bias.
- According to him, BTC’s uptrend is intact on the daily and weekly timeframes, and needs to overcome the $72,000 and set up a new swing high. Failing to do this could result in a move to $67,000.
- If the $67,000 level is breached on the daily timeframe, investors should pay attention to the weekly support level of $61,000.
- Between these two levels, there is no directional bias. A break of $72,000 to the upside triggers the continuation of the uptrend. A weekly flip of $61,000 will confirm a bearish market structure.
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BTC/USDT 1-day, 1-week chart
Read more: Is BTC out of the woods?
Until Bitcoin price provides a clear bias, it would be risky to invest heavily in altcoins. Therefore, the next few days need
Author
Akash Girimath
FXStreet
Akash Girimath is a Mechanical Engineer interested in the chaos of the financial markets. Trying to make sense of this convoluted yet fascinating space, he switched his engineering job to become a crypto reporter and analyst.
