Bitcoin is holding above $37,500, after it fell to as low as $36,377 on Tuesday, the lowest level in more than two weeks, as Russian President Vladimir Putin ordered troops to separatist areas within Ukraine.
is about 15% lower from seven days ago and 45% beneath its all-time high set in November, as investors turn to risk-off mode amid fears around the Ukraine crisis and Fed’s aggressive tightening of monetary policy.
As bitcoin tested its long-term support of $37,400, the next key support level to watch is $27,200, according to Katie Stockton, founder and managing partner at Fairlead Strategies.
However, “while spot swings in the short-term from Russia-Ukraine or Fed headlines are to be expected, we don’t think that spot prices will crack just yet,” crypto trading firm QCP Capital wrote in Sunday notes.
The market has already priced in an aggressive hiking schedule of the Fed, according to the firm.
Meanwhile, the funding rates of perpetual bitcoin futures remain flat, though “a good portion of the leveraged longs” have been liquidated, the firm wrote. A positive funding rate is usually seen as bullish, as investors are willing to pay in the long position, while a negative funding rate is usually a bearish sign.
For the past three days, more than $500 million leveraged long positions have been liquidated, according to crypto futures trading and information platform Coinglass.
“We think it will be more of a grind lower with the possibility of short-squeezes on positive headlines. These spikes in spot price would probably be met with aggressive spot selling, capping the topside,” according to QCP.
In addition, with bitcoin’s dip, its 90-day correlation with the S&P 500
on Tuesday reached the highest level since October 2020, while its correlation with gold turned negative, according to Arcane Research. It challenges the view long held by some bitcoin supporters that the digital asset could be seen as a store of value and “digital gold.”
“Bitcoin’s safe haven narrative has almost completely fallen apart,” Yuya Hasegawa, market analyst at crypto exchange Bitbank wrote in Tuesday notes.