Bitcoin price recovered from the low of its current range and recovered its weekend losses. The cryptocurrency may be climbing back into previously lost territory, but uncertainty is king in the current market conditions.
At the time of writing, Bitcoin is trading at $16,400. In the past 24 hours and last week, the price posted gains of 2% and 4% respectively. Other cryptocurrencies in the crypto top 10 follow, but Binance Coin (BNB) and Dogecoin (DOGE) lead the bounce.
The Highs and Lows, Is There Hope for Bitcoin Price?
Investment firm Cumberland posted a market update highlighting the uncertainty in Bitcoin and other cryptocurrencies. The nascent asset class is trading within a range after experiencing massive selling pressure during the collapse of FTX.
In this uncertain and low liquidity environment, with FTX and its market maker Alameda Research out of the picture, Bitcoin price is likely to trade sideways. During the holiday season, the crypto market will again see a decrease in liquidity, leading to volatility and crab-like price action.
However, Cumberland believes there are catalysts to see a move to new lows. The collapse of the FTX created a contagion effect across the industry. Many companies and projects relied on the crypto exchange and its venture branch.
These companies are thus vulnerable and may not be able to continue their activities. The market is already seeing this effect with BlockFi’s Chapter 11 bankruptcy filing. Many wonder how many companies will take a similar measure in the coming weeks.
If many more crypto projects cease operations, the crypto market could reach new lows before the end of 2022. Cumberland said the following about the status of “crypto lending 1.0”:
Version 1.0 of the centralized lending industry has effectively been completed, and as a result, widespread collateral settlements will be conducted by bankruptcy lawyers in the coming months and years.
Max Pain Price Could Play in Bitcoin’s Favor?
On the other hand, the bullish case for Bitcoin price is seeing some momentum thanks to adoption. Ironically, the collapse of FTX is causing many users to take custody of their assets and become less dependent on third-party services.
In addition, Cumberland sees a continued bullish trend for stablecoin-based use cases, non-fungible token (NFT) technology, and Ethereum/Polygon as a foundation for Web2 businesses. The company added:
Against this backdrop, volumes remain explosive; this is not the bear market of 2018 when activity completely evaporated. Instead, it is clear from our perspective as liquidity providers that the number of entities taking care of (and executing transactions) is steadily increasing.
Cumberland believes that regulation can be a boost for both sides. If the regulatory landscape for 2023 looks favorable, Bitcoin and others could enjoy lasting relief in previously lost territory.
In the options market, as NewsBTC reported, players are betting on buy contracts (call contracts) and sell contracts (put contracts) targeting $30,000 and $10,000 respectively. The maximum pain for these contracts expiring in December is $20,000. Will BTC move in that direction?