Bitcoin (BTC) Avoids Heavy Losses Amidst USDTerra Driven Meltdown

Key Insights:

• Bitcoin (BTC) fell by a relatively modest 6.44% on Wednesday as the broader market took a hit.
• TerraUSD (UST) and Terra (LUNA) dragged the majors into the deep red, with UST’s de-pegging raising the prospects of a regulatory overhaul.
• Bitcoin (BTC) technical indicators flash red. This morning, bitcoin sits well below the 50-day EMA.

Bitcoin (BTC) fell by 6.44% on Wednesday as TerraUSD and the NASDAQ 100 influenced. Reversing a 3.11% gain from Tuesday, bitcoin ended the day at $29,017.

A choppy session saw bitcoin find early support before succumbing to market forces. Bitcoin hit a late morning intraday high of $32,136 before sliding to a late day low of $28,087.

Market sentiment toward TerraUSD (UST) and Terra (LUNA), coupled with a NASDAQ 100 sell-off, left bitcoin deep in the red.

Bitcoin’s loss was modest relative to the broader crypto market that struggled throughout the day.

Investors Turn to Stablecoins Amidst USDTerra Fueled Meltdown

On CoinMarketCap, stablecoins became a feature of the top 10 cryptos, with Tether (USDT) and USD Coin (USDC) sitting behind bitcoin and Ethereum (ETH). Binance USD (BUSD) moved into the number 8 spot, leaving little room for the altcoins.

Binance (BNB), Ripple (XRP), Cardano (ADA), Solana (SOL), and Dogecoin (DOGE) formed the remainder of the top ten, with Terra LUNA tumbling to the number 37 spot.

UST faired better, recovering to $0.78 levels to rank at #11.

Crypto Market Sell-off Sees $300 Billion Market Cap Wipeout

Performance-wise, the losses were unprecedented. LUNA ended the day with a 94% loss.

Anchor Protocol (ANC) slumped by 33%, with Avalanche (AVAX) down 32%. Things were no better for SOL (-24%) and XRP (-19%), with ADA (-15%), BNB (-16%), and ETH (-11%) also seeing heavily losses.

The total crypto market cap ended the day at $1,264 billion, down $149 billion and $290 billion for the current week.

Bitcoin Correlation with NASDAQ 100 Adds to Crypto Woes

On Wednesday, the NASDAQ tumbled by 3.18% as investors responded to April inflation figures from the US. While softer than in March, the numbers were strong enough to support a more aggressive Fed rate path trajectory.

In April, the annual rate of inflation softened from 8.3% to 8.0% versus a forecasted 7.7%.

Both bitcoin and the NASDAQ succumbed to the numbers after an initial move northward.

Bitcoin Fear & Greed Index Slides to

Today, the Fear and Greed Index held steady at 12/100. The lack of movement came despite the bitcoin and broad-based crypto sell-off.

This morning’s value remained above the most recent low of 8/100 on March 14, 2020. On Wednesday, the Index had also avoided a decline despite the market angst over TerraUSD and LUNA.

For bitcoin investors, the “Extreme Fear” zone relays investor anxiety over the threat of another sell-off. Further fallout from the TerraUSD and LUNA events could bring sub-10/100 into play.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.39% to $29,130.

Technical Indicators

BTC will need to move through the $29,749 pivot to target the First Major Resistance Level at $31,401 and resistance at $31,500.

BTC would need the broader crypto market to support a return to $31,000.

An extended rally would test the Second Major Resistance Level at $33,794 and resistance at $34,500. The Third Major Resistance Level sits at $37,845.

Failure to move through the pivot would test the First Major Support Level at $27,358. Barring another extended sell-off, BTC should steer clear of sub-$25,000 levels. The Second Major Support Level at $25,701 should limit the downside.

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. BTC sits below the 50-day EMA, currently at $33,777. This morning, the 50-day pulled back from the 100-day EMA. The 100-day EMA fell back from the 200-day EMA; BTC negative.

A move through the 50-day EMA would support a run at $35,500.