Price Pullback Tests Bitcoin’s $21k Support

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Written By: Marcus Wang

Edited by: Charmyn Ho

Macro and Overall Risk Sentiment

U.S equities have seen a meaningful pullback since its rebound in January this week, with hawkish Fed comments dampening the market sentiment. Meanwhile, the crypto market followed suit, with both BTCUSDT and ETHUSDT losing 7.3% and 6.3%, respectively, in the past week.

BTCUSDT Perpetual

Bitcoin broke down the resistance level at $23k, the price level that the largest cryptocurrency has clung to in the past two weeks. Fibonacci retracement based on recent peaks indicates the next strong support is at $21k, the 61.8% sequence. Long liquidations of Bitcoin's futures spiked following the unexpected pullback, which may have amplified the magnitude of downward price movements. On a bright note, the funding rate of Bitcoin perpetual, weighted by open interests, has remained positive, suggesting that bears have yet to regainnot taken the upper hand.

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ETHUSDT Perpetual

Similarly, Ether broked down the $1,600 support level, facing immediate support at $1,500, the 50-day EMA level. RSI has plunged from 85 in mid-January to 47 as of the time of writing, a neutral reading in terms of trading sentiment. The open interests of ETH futures in terms of ETH have seen a 20% drop since mid-January while the perpetual funding rate has maintained stable, indicating a profit realization from traders in the past few weeks.

Ethereum’s Shanghai upgrade has seen meaningful progress and is set to complete in March. However, the largest Ethereum upgrade since the Merge has not buoyed investors’ interests in Ether.

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