Category: NEWS
-
Smartest man in the room has a warning about Bitcoin prices
-
Morgan Stanley’s Mike Wilson is seen as one of the best analysts in Wall Street.
-
He warned that the S&P 500 is ripe for another 21% crash.
-
If this view is valid, we could see BTC prices crash as well.
Bitcoin price dipped to about $24,000 as a somber mood engulfed the stocks and cryptocurrency industry. After rising to a high of $25,373 during the weekend, the BTC/USD price has struggled to retest it this week. And now, one of the best sell-side analysts in Wall Street, has issued a blistering warning about the market.
Morgan Stanley’s Wilson warning
In a note on Tuesday, Mike Wilson, the Chief Equity Strategist at Morgan Stanley, warned that the S&P 500 could crash by another 21%. If this happens, it means that the index could crash from the current $4,000 to about $3,140.
Wilson noted two main things that could push the S&P 500 index much lower in the near term. First, there is a reset of expectations about the Federal Reserve. The argument is that investors were expecting the Fed will start pivoting soon.
However, the reality is that recent data point to more hikes this year. Inflation remains stubbornly high while the unemployment rate has fallen to a multi-decade low of 3.4%.
Second, corporate earnings have been a bit weak. Companies like Goldman Sachs and Home Depot published relatively weak financial results. According to FactSet, S&P 500 constituent companies have had a blended growth of -4.7% in the quarter, the worst since 2020.
Further, with the bond yield being highly inverted, there is a likelihood that the US will go through a major recession. Stocks tend to underperform in such a period. Mike Wilson is not the only analyst worried about stocks. In a widely-read report, Jeremy Grantham warned that the S&P 500 could crash to about $3,200.
Implications for Bitcoin prices
Mike Wilson did not mention Bitcoin prices in his note. He did not also mention cryptocurrencies in general. However, if his warning materializes, the fact is that it will have serious implications for BTC and other cryptocurrencies.
In the past few months, Bitcoin and stocks have had a close correlation. A close look at the data shows that BTC and S&P 500 have a correlation coefficient of 0.91. A correlation of 1 or close to 1 is usually a sign that the two assets are closely correlated.
Therefore, if the S&P 500 crashes by 20%, there is a high possibility that Bitcoin price will drop further than that. As such, while it is too early to predict whether Mike Wilson will be right, it makes sense to start taking profits.
-
-
Bitcoin’s break to $25k was fueled by massive liquidations
- Bitcoin price broke above $22,500 to new highs above $25,000 amid the hunt for short stops and liquidations.
- The move to $25k resulted from short liquidations of over $155 million.
- While price could retreat to $24k, Bitfinex analysts say recent price movements could be indicative of a bottom.
Bitcoin price rose above $25k briefly before slipping back under the key psychological and technical area.
According to analysts at crypto exchange Bitfinex, the retreat to this week’s lows comes after a 10% upswing and a green weekly candle. However, the benchmark crypto did not hit a crucial daily candle close at that zone.
Even then, it is likely the price movement is another major step towards “the latter stages of a gruesome bear market,” the analysts noted in a report.
BTC spike to $25k fueled by massive liquidations
Bitfinex analysts also suggest that Bitcoin’s breakout from the $22,500 price level to highs above $25,000 was fueled by the massive liquidations recorded over the past few days.
Commenting on BTC price outlook and what could lie awake in coming weeks, they said in a statement shared with CoinJournal.
“Over the past two weeks, the BTC price has been hunting both over-leveraged long positions, as well as liquidating over-eager shorts of over $155 million. It reached an eight-month high of $25,000 in the process. Another sharp but short-lived pullback caught out some short-term bullish speculators off-guard who were betting on a push to the upper $25,000-$26,000s on Thursday, February 16th, as evidenced by a spike in long position liquidations on that day. Profit-taking in the wake of the recent rally and a stop-run on those who had gotten overly aggressive chasing the upside might well send Bitcoin back below $24,000 in the week ahead.”
On what happens next, the analysts say price action as has played out recently has historically, resulted in ranged price movement. This is due to the action that has seen both longs and shorts have been simultaneously wiped off.
“The most probable move going forward is to scale out of positions partially and wait for the range to form without a strong directional bias,” they explained.
In a tweeted prediction for Bitcoin price, YouTuber and crypto analyst Sheldon The Sniper says Bitcoin could go to $28k or revisit support at $21k. He shared the outlook above as BTC price continued to hover around $25,683 at 2:15 pm ET on Tuesday.
$BTC update
1Hour chart forming a flag and this is a crucial level for the market
We have a support and resistance trend and ultimately which ever trend we close outside of will give us the next direction . Break of resistance we go to 28K
Break of support we go to 21K pic.twitter.com/1BdbR0wpjR— Sheldon The Sniper (@Sheldon_Sniper) February 21, 2023
-
Bitcoin “shrimp” addresses hit 43.2 million
- Bitcoin “shrimp” wallets, which hold 1 bitcoin recently surged to 43.2 million.
- Bitcoin addresses with 0.01 BTC or less have also hit an all-time high of 32.6 billion.
- Data also shows bitcoin wallets in profit have reached 70% after recent price gains.
Bitcoin price recently reached an eight month high when it rallied to highs above $25,000 last week.
Despite this, the latest market data from asset manager CoinShares shows Bitcoin investment products saw outflows of $25 million, about 78% of the $32 million that exited amid negative sentiment. But a new report shared by crypto exchange Bitfinex indicates that Bitcoin still saw massive growth in terms of the address count with one BTC or lower.
Bitcoin “shrimp” addresses hit 43.2 million
According to data shared in the Bitfinex Alpha report published Monday, 20 February 2023, Bitcoin addresses with less than one bitcoin, or “shrimps”, recently jumped to 43.2 million – the highest the count has hit in the flagship cryptocurrency’s history.
No doubt this has been greatly helped by the massive growth in addresses with 0.01 BTC or less. Per the Bitfinex report, and from on-chain data by analytics platform Glassnode, the number of wallets with balances of 0.01 BTC or under recently hit 32.6 million.
Overall, wallet addresses with non-zero balances are at an all-time high, which Bitfinex researchers say is indicative of “an influx of new investors.”
As CoinJournal recently covered, shrimps actually increased their buying even as prices fell after the FTX collapse. And it is this increase in the number of non-zero wallets that could have fueled Bitcoin’s recent upside momentum, the Bitfinex team noted in their report.
Is it the start of a new Bitcoin bull market?
Bitcoin has been largely upwards in January and February, with nearly 50% in overall gains year-to-date as of 21 February. In fact, as Glassnode data shows, the number of Bitcoin wallets in profit (7-day moving average) has also just hit a 10-month high.
📈 #Bitcoin $BTC Percent Addresses in Profit (7d MA) just reached a 10-month high of 70.955%
View metric:https://t.co/ik5IkrcQZM pic.twitter.com/E9XGf1M3cT
— glassnode alerts (@glassnodealerts) February 21, 2023
While analysts warn of a potential pullback amid profit booking across crypto, the sentiment is still mostly bullish for BTC in the short term. And the recent growth in shrimp wallet addresses aligns with historical market trends in a bear market.
In this case, bull markets have traditionally been highlighted by wealth distribution, with the entry of new short term holders a metric that helps signal the shift in market direction.
However, as Bitfinex analysts noted in their report, the latest data is only a “snapshot of the current situation.” In short, it is hard to predict where the market goes next at any one given time.
-
Bitcoin price rose despite $25 million in product outflows
- Bitcoin products saw $25 million in outflows last week, according to asset manager CoinShares.
- There was $3.7 million in short Bitcoin as investor sentiment flipped negative on recent regulatory concerns.
- But crypto prices still recorded huge moves, with BTC hitting a six-month high above $25,000.
Bitcoin price hit its highest price level in six months last week, with the flagship cryptocurrency testing bears’ resolve above the $25,300 zone.
However, digital asset management firm CoinShares says despite reaching a new year-to-date high, the flagship cryptocurrency still bore the brunt of the negative sentiment that pierced the market as US regulators upped their crackdown on multiple industry sectors.
Digital assets see $32 million in outflows
As CoinShares Head of Research James Butterfill points out in a weekly funds flow report released on Monday, Bitcoin recorded the largest share of outflows seen in the digital assets investment products last week.
Per the researcher, total crypto funds outflows totaled $32 million this past week, the largest single week outflows since December last year. But almost $25 million of the outflows were in Bitcoin products, with negative sentiment seeing short Bitcoin investment products account for $3.7 million in inflows.
Infact, as US Securities and Exchange Commission (SEC) increased its crackdown on stablecoins and staking services among other sectors of the crypto industry, crypto outflows hit $62 million. The market did record significant outflows as Bitcoin led the market in holding prices above key levels.
According to Butterfill, the mid-week flip in sentiment (with Bitcoin price soaring more than 10%) helped digital assets products register $30 million in inflows. This in turn helped push the total assets under management in exchange-traded products (ETPs) to its highest level since last August. Butterfill noted:
“The negative sentiment amongst ETP investors was not expressed in the broader market with Bitcoin prices rising by 10% over the week, this price appreciation pushed total assets under management (AuM) to US$30bn, their highest level since August 2022. We believe this is due to ETP investors being less optimistic on recent regulatory pressures in the US relative to the broader market.”
Crypto assets saw mixed flows
While Bitcoin recorded over 78% of the outflows, Ethereum products saw $7.2 million in outflows last week. Other top altcoins with large withdrawals included Cosmos ($1.6 million), Polygon ($0.8 million), and Avalanche ($0.5 million).
Yet, investment products for Aave, Binance, Fantom, XRP, and Decentraland saw inflows of between $0.36 million and $0.26 million, CoinShares highlighted in its report.
Elsewhere, while crypto assets experienced a second consecutive week of outflows, blockchain equities had a more positive outlook from investors, with $9.6 million in inflows last week. Blockchain equities have now had six consecutive weeks of inflows.
