Bitcoin (BTC) is poised to endure its worst weekly decline since the FTX crash last November following the crypto market mayhem seen Thursday, and optimistics’ hopes were dashed when a pivotal decision in the court battled between Grayscale and U.S. regulators – which could support BTC’s price – failed to materialize Friday.
BTC’s price slipped below $26,000 Friday afternoon after a rally toward $27,000 – which erased some of Thursday’s sharp decline – fizzled. The largest cryptocurrency by market capitalization had plummeted to $25,392 Thursday afternoon, hitting its lowest price since mid-June, amid cascading liquidations of leveraged trading positions.
Market observers had been focused on 11 a.m. ET (15:00 UTC) Friday, when there was reason to believe there could be a court decision in the legal feud between investment manager Grayscale and the SEC. But the time came and went with nothing announced.
“A favorable outcome might provide a substantial tailwind for BTC,” she explained. “Although an adverse ruling wouldn’t inherently spell doom for BTC, it might accentuate prevailing bearish sentiments.”
“The sudden drop in crypto prices was driven by market structure rather than news,” K33 said. “While many have tried to hang the sharp drop on different news, ranging from news of SpaceX (Tesla) selling BTC or increased expectations of interest rate hikes in the U.S., none of these can explain the timing or the sharpness of the drop.”
The flush out might actually be positive for BTC’s prospects, the report argued. “There is no reason this drop should lead to a continued negative trend. If anything, the wipeout of longs and increased shorting may lay the foundations for an upcoming short squeeze.”
“We believe that a lot now rests on [U.S. Federal Reserve Chair Jerome] Powell’s speech at Jackson Hole next week, but having held the very key 24-25k zone on this move, our wave count calls for an end to the corrective Wave A here, a bounce in Wave B to retest the bottom of the wedge,” the firm explained in a market update sent via Telegram. “This ends off with the final Wave to end the quarter.”
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