Digital Assets: Bitcoin Looking Weak At $32,670; May Test $29K

May 9, 2022 | Digital Assets, News
https://dailyalts.com/wp-content/uploads/2022/05/BTC-USD-Weekly-overlay.png

The leading crypto has broken its previous low, and looks set for a decline.

Bitcoin continued its bearish trajectory today after the last Fed meeting hiked rates by 0.5%, the largest increase since 2000. The crypto, at the time of writing, is trading at $32,189, down nearly 7%, and in tandem with a massive fall in the mainline US indices: Dow (-1.76%); S&P500 (-2.66%); and Nasdaq (-3.55%). Global equity indices had also fallen today, slammed by a sweeping ‘risk-off’ mindset taking hold among investors.

Technicals

Technically, on the weekly chart (see above), it is clear that bitcoin has broken down from a bearish flag pattern (in parallel dotted lines) and is likely to resume the downtrend preceding the pattern.

The target implication of the pattern is approximately $10,000 to the downside, which is more or less the region of $29,000, and within a strong support band shown by the two green horizontal lines.

Bitcoin is now down by over 52% compared to its all-time-high of $69k touched on November 10 last year.

Bearish news

Bitcoin’s decline comes as large chunks of leveraged long positions have been liquidated across exchanges on Thursday and again today (Monday).

Over the weekend, sentiment was also knocked by the news that the UST stablecoin on Terra (LUNA), which is backed partially by BTC, temporarily lost its $1 parity peg over the weekend. Luna Foundation Guard was therefore forced to loan out BTC to a trading firm in an effort to stabilize the peg.

LFG loaning out BTC and UST

The Luna Foundation Guard said in a series of tweets today:

“Per the LFG’s mandate, the LFG will proactively defend the stability of the $UST peg & broader Terra economy, especially under volatility and the uncertainty of macro conditions in legacy markets.”

“As a result, the LFG Council has voted to execute the following:

– Loan $750M worth of BTC to OTC trading firms to help protect the UST peg.

– Loan 750M UST to accumulate BTC as market conditions normalize.”

The traders will trade the capital on both sides of the market to help defend the UST’s $1 parity. Further, according to Terra’s co-founder Do Kwon, “LGF is not trying to exit its bitcoin position.”

Related Story: Bitcoin Takes Out $48K, Now In Green For 2022

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