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Could the recent Bitcoin dip be a harbinger of a deeper correction?

CEX.IO

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In this week’s crypto highlights, we explore the price movements of BTC, SNX, DOT, and INJ. Additionally, this recap includes other notable industry news items that occurred over the last seven days. Without further ado, let’s dive into the latest market developments.

Market spotlight: Bitcoin showed its largest one-day drop of 2023

Bitcoin price registered eight bullish weekly candles in a row for the first time since April-June 2017. The last time this happened, the asset experienced a correction to the 20-week EMA, which is currently located near $34,000.

On December 11, the asset registered a 7.5% one-day price drop, which became the largest this year to date. Over $450 million in crypto long positions were liquidated in a day, pushing most top markets to the red zone. According to Glassnode data, short-term BTC holders continued to increase transfers on exchanges in the following days, indicating rising selling pressure.

The Bitcoin price dip pushed the asset to the middle of the Bollinger channel on a daily chart. But afterward, it seemed the “buy the dip” idea spread across the crypto community, causing a rebound to $43,000. However the surge was accompanied by decreasing volume. In addition, the daily RSI arguably formed a bearish divergence, indicating that there is still a chance for another correction.

There is also a gap in the BTC futures market on CME in the $39,500-$40,300 range. Historically, the gap was filled 28 out of 30 times, hinting that the asset may soon retest this area.

Nevertheless, ETF anticipation remains strong, and this could help bulls recover faster from the recent drop. The $43,000-$49.000 range, which we outlined two weeks ago, remains a major short-term bullish target.

Noteworthy market events

Spot Bitcoin ETF talks have reportedly reached an advanced stage

According to Reuters, the U.S. Securities and Exchange Commission (SEC) and asset managers have reached the point of discussing “key technical details” for potential spot ETF approvals. The outlet reported that such points are typically discussed at the final stage before a product is approved. The SEC is particularly interested in the specifics of storing, creating, and redeeming positions, along with disclosing risks to investors.

On December 12, Bloomberg’s ETF analyst James Seyffart said that BlackRock, Grayscale, Franklin, and Fidelity met with the SEC regarding their Bitcoin product filings in the last few days. BlackRock also recently modified its spot Bitcoin ETF application to facilitate greater participation from large banks. The revision involves the creation of new shares in the fund using cash, rather than exclusively relying on crypto assets.

Google seems to be preparing for the launch of spot Bitcoin ETFs as well

Google updated its advertisement policy, allowing the promotion of “cryptocurrency coin trusts” that target U.S. customers starting on January 29, 2024. According to a statement, the update mandates that advertisers must meet specific criteria, and obtain certification from Google to promote relevant products.

Spot Bitcoin ETFs align with the parameters of Google’s updated policy, indicating that they might also fall under these rules. Some crypto enthusiasts perceive this as an indication that spot Bitcoin ETFs might soon receive approval from the SEC.

Robinhood expanded its crypto services to Europe

On December 7, Robinhood announced the launch of its crypto services for eligible customers within the European Union (EU). This platform allows traders to engage in the buying and selling of over 25 cryptocurrencies. When making the announcement, Robinhood claimed “it is the only custodial crypto platform where customers will get a percentage of their trading volume back every month.”

In its third-quarter earnings report, the company also unveiled plans to start brokerage operations in the U.K., and commenced onboarding customers last week.

LayerZero confirmed a token launch in the first half of 2024

In a recent X post, LayerZero Labs unveiled its plan to launch a token in the first six months of 2024. Emphasizing its dedication to introducing a LayerZero token, the company highlighted the priority placed on executing the distribution process correctly.

The team confirmed that native token support was initially present in the protocol. Over the last few months, a potential LayerZero token launch and its airdrop have been actively discussed within the crypto community. So it’s no wonder LayerZero’s post about the token launch gained over 3.5 million views in a week.

One sentence news

  • The U.S. National Vulnerability Database (NVD) identified Bitcoin’s inscriptions as a cybersecurity risk.
  • The Open Network (TON) faced significant challenges in transaction processing, after the introduction of an Ordinals-inspired protocol that spiked activity.
  • Societe Generale’s new euro-pegged stablecoin EURCV was listed on Bitstamp, which is considered the first time a regulated European bank launched a stablecoin on a crypto exchange.
  • KuCoin settled with New York authorities, agreeing to pay a total of $22 million, and terminate access for users in the state.
  • A U.S. judge ruled that former Binance CEO Changpeng Zhao must stay in the U.S. until his sentencing date in February 2024.
  • The U.S. Internal Revenue Service (IRS) demanded FTX pay $24 billion in taxes.

Notable price performances

SNX price jumped, after an inflation proposal passed

The Synthetix community approved governance proposal SIP-2043, dedicated to ending SNX token inflation as a staking incentive. Instead of token inflation, the project will adopt other strategies, such as token buybacks and burns, which are set to be enacted in the upcoming Andromeda update. The project intends to utilize trading fees for buybacks and burns, effectively diminishing the token supply.

This news helped SNX’s price maintain its upward momentum, showing a 15% weekly price increase. Over the last 30 days, the asset surged by over 60%. The 20-day EMA acts as a dynamic support line for the SNX price. Its breakout could potentially drive the asset to the 0.5 Fibonacci point.

DOT price approached a 2023 high

The DOT price has been moving inside a descending channel for almost nine months, but the price broke above it in November. Since then, the asset has predominantly experienced upward movement. The catalyst behind the recent rally could be the Polkadot 2.0 update, which is widely anticipated to take place in early 2024.

Last week, the price approached a 2023 high, reaching the $7.62 level. The price tried to break that high several times, but failed to do so by the time of this writing. This suggests that the asset might be losing its bullish momentum. The middle of the Bollinger channel on a daily chart, or the 0.382 Fibonacci point, could act as the next potential target for bears.

However, if the asset updates its 2023 high, this could help bulls reestablish upward momentum.

INJ set a new all-time high

The INJ price is currently the best-performing digital asset of the week among the top 100 by market cap, showing a more than 80% price increase. This rally helped the asset set a new all-time high on December 14. In general, the asset price has surged by over 2,300% year-to-date.

Following the Elliot wave theory, it might be assumed that the INJ price is currently in its fifth and final wave. There are several ways to calculate the potential fifth wave’s length, and one of them suggests that it equals 0.382 of the first and third waves combined. In this case, the potential target could be around $36.70. The closest target for a potential correction could be the previous all-time high of $25.

Tune in next week, and every week, for the latest CEX.IO crypto highlights. For more information, head over to the Exchange to check current prices, or stop by CEX.IO University to continue expanding your crypto knowledge.

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Disclaimer: For information purposes only. Not investment or financial advice. Seek professional advice. Digital assets involve risk. Do your own research.


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