Crypto newsletter: Bitcoin price remains below $50k after recent flash crash

• Crypto market cap drops below $2.2 trillion
• Bitcoin price below $50,000
• Cardano social and on-chain volume is on the rise

The past week was a very negative one for the cryptocurrency market. Over the weekend major coins experienced one of the fastest and deepest flash-crashes since May as a result of which Bitcoin and Ethereum prices dropped 27% and 24% respectively. Other altcoins also fell sharply on Saturday, however many small projects showed more resilience compared to Bitcoin. Over the past week, ether’s price was down 3.7% versus bitcoin’s 14.6% drop-off. The precipitous decline came in response to a broader sell-off across financial markets, which have been spooked by the omicron coronavirus variant. A large part of the recent losses has been erased on Saturday, but during today's session once again we can observe sellers activity. Bitcoin's market dominance decreased to 41.1%. The capitalization of all digital assets in circulation rose to 2.19 trillion, while an average daily trading volume is registered at $126.05 billion.

Crypto market cap fell below $2.2 trillion. Source: Coinmarketcap.com

BITCOIN: 

• El Salvador President Nayib Bukele said the Central American country had acquired an additional 150 bitcoins after the digital currency’s value slumped again.
• On Saturday trading volume of roughly $20 billion was recorded, according to data compiled by CoinDesk, although by Sunday the volume had dropped sharply.

Bitcoin trading volume across 11 major centralized exchanges skyrocketed on Saturday. Source: CoinDesk

• Weekend sell-off significantly reduced open interest on Bitcoin futures to the lowest level since September. Meanwhile some analysts believe that recent price action was triggered by liquidation of excessive leverage positions rather than change in overall market sentiment

Bitcoin futures open interest chart. Source: Coinglass

• The Crypto Fear & Greed Index fell to 16, which corresponds to the "extreme fear" mode. In the past, this often heralded a rebound in prices.

Crypto Fear & Greed Index lowest level since July 2021. Source: Alternative.me

• Despite recent bearish price action, hash rate — a measure of the computing power dedicated to the network — remains near all-time highs. According to popular belief, spot price inevitably follows trends in hash rate.

Hash rate is at its highest-ever sustained levels. Source: MiningPoolStats

Bitcoin price dropped nearly $10,000 in roughly an hour to as low as around $42,000 early Saturday after which recovery move was launched. However buyers failed to regain lost ground and move above the $50,000 level. As long as the price sits below, further downward move is possible. Source: xStation5.

ETHEREUM:

• The second-largest cryptocurrency crashed to a low of $3,500 over the weekend, however price has shown resilience as it quickly recovered above $4000 handle
• ETH has outperformed Bitcoin and has reached a three-year high, which may be a sign that investors are treating ether as a hedge

ETHEREUM plunged over the weekend, however sellers failed to stay below $3500 handle and price quickly rebounded above psychological $4000 level. Source: xStation5

CARDANO: 

• The social volume metric for Cardano skyrocketed from 328 to 3059 within 24 hours, indicating an 832% increase. Similar move was last seen in August, just before price reached its all-time high at $3.10.

Cardano social volume  rose sharply despite negative sentiment. Source: Santiment

• On-chain volume for ADA set up a higher high of 3.86 billion and 4.33 billion between December 3 and December 4, while Cardano price produced a lower low during the same time frame.

Bearish divergence between on-chain volume and  Cardano price may indicate that bulls are becoming more active. Source: Santiment

CARDANO price bounced off the earlier broken lower limit of the triangle formation on Friday and downward move deepened over the weekend. However it seems that buyers managed to halt declines around the $1.22 level which is marked with a lower limit of the 1:1 structure. Source: xStation5