Cryptocurrency markets have been slammed by the sudden bankruptcy of FTX.
On Thursday, Bitcoin experienced a significant decrease in value, with a drop of 1.3% overnight. This decline was the largest seen in 3.5 weeks and was attributed to the deterioration of stocks and the appreciation of the US dollar. As a result, the value of BTC fell to $17,400 and continued its decline into Friday reaching a low of $16,527.
Ethereum also experienced a similar decline and is currently trading at $1,180.
The Cryptocurrency Fear and Greed Index decreased by 2 points to 29, indicating a state of “fear” in the market. From a technical view, Bitcoin has struggled to maintain its value above the 50-day moving average, leading to increased speculation and downward pressure on its value. While such pressure may typically only last for a short period of time, it can be exacerbated by external factors.
On the weekly time frame, we can see that the current downward trend has been in place since the end of May. The Relative Strength Index (RSI) appears to be forming a bullish divergence which could indicate that the sellers are becoming exhausted or that there may be a period of consolidation before the next leg down.