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Bitcoin (BTC) Slumps below $17000 on FTX Contagion Fears. What’s Next?

Bitcoin BTC

Bitcoin BTC plunged to the lowest level since November 28, 2020, giving up over 11% at $16,569 as investors fear that the FTX collapse will spread across the cryptocurrency markets. The sell-off has intensified the last hour across the board as Ethereum is 11% lower, ADA is 7.68% lower, XRP is 12.8% lower, DOGE is 7.36% lower, Solana token is 39% lower, while Litecoin is 7.15%.   

Despite the Bankman-Fried, on Monday trying to calm investors by saying that FTX exchange had enough assets to cover all its clients, the FTT token collapsed on rumours that Alameda Research’s, liabilities exceeded its assets, most of which were in FTT token.

FTX is the third biggest crypto exchange, with billions of dollars in trading volumes.

FTT CEO, Sam Bankman-Fried, was a big influencer in the crypto sphere and has many times appeared in cryptocurrency committee’s and the Congress to testify about the future of the crypto industry while he is a big political donor.

Facing a “liquidity crisis” FTT turned to Binance for help. Changpeng “CZ” Zhao the CEO of Binance and FTX CEO Bankman-Fried later on Monday announced Binance’s intention to acquire FTX as the panic spread across the crypto universe.

On Tuesday rumours spread on Twitter that Binance exiting a deal to buy FTX.

Today Changpeng “CZ” Zhao through a Twitter post said to stop trading FTT Token.

Meanwhile, in the last hour, the Alameda Research website is offline and the FTX ventures website is also offline and the majority of the FTX legal team quit, according to reports.

Bitcoin BTC Technical Analysis

Bitcoin sell-odd accelerates today as the number one cryptocurrency pierced the 17,000 psychological support. Even if the bitcoin looks oversold as the RSI index indicates with a reading of 27, that doesn’t mean that the bottom is here.

The ball is clearly in the bear’s court, initial support for BTC stands at $16,446 the daily low. A break below would open the way for a move down to $15,939 the low from November 17, 2020. In case the sellers break that level a panic selling might push the price towards $14,190 the low from November 5, 2020 trading session.

On the upside, resistance for bitcoin would be met at 18,858 the daily top. A break above might attract more bids targeting the 50-day moving average at 19,659. A convincing move above the 50-day SMA would face fierce resistance at the 100-day moving average at 20,531.

All in all bitcoin’s technical picture is bearish and needs some good news from the FTX front to calm investors and attract fresh bids. FTX’s collapse will not be over soon and will have a negative impact on the altcoins market for many years to come.

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