Daily News | Liquidity Concerns Grow as Bitcoin Leads Exodus, Altcoins Adapt; US Default Drama Continues

2023-05-16, 01:38

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## Crypto Daily Digest: Bitcoin Leads Crypto Exodus, Altcoins Show Resilience Amid Market Volatility and Liquidity Concerns

<a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> (BTC) and Ether (ETH) experienced moderate price increases, with BTC surpassing $27,000 and ETH hovering around $1,820. However, concerns regarding liquidity in the crypto markets have arisen due to regulatory uncertainty leading market makers like Jane Street and Jump Crypto to withdraw from crypto trading. Investors are closely monitoring economic indicators, such as US monthly retail sales and housing data, for potential signs of a slowdown.

Additionally, CoinShares' report reveals that digital asset investment funds have witnessed a net outflow of $54 million for the fourth consecutive week, with <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a>-related products accounting for $38 million of the outflows. Over the past month, <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> alone has experienced outflows totaling $160 million, comprising 80% of all crypto outflows during that period. Despite the overall outflows, certain altcoins like <a href="/price/cardano-ada" target="_blank" class="blog_inner_link">Cardano</a> (ADA), <a href="/price/tron-trx" target="_blank" class="blog_inner_link">TRON</a> (TRX), and Sandbox (SAND) have seen inflows, indicating that investors are becoming more selective and willing to explore different assets.

Meanwhile, research from the Federal Reserve Bank of Chicago sheds light on the factors behind the run on platforms like <a href="/price/celsius-network-cel" target="_blank" class="blog_inner_link">Celsius Network</a>. The study highlights that the run was primarily driven by large holders of cryptocurrency, particularly sophisticated institutional investors. Account holders with investments exceeding $500,000 were the quickest to withdraw their funds, leading to a disproportionate reduction in their holdings. Notably, FTX experienced a significant withdrawal rate of 25% in a single day, while Voyager Digital lost nearly 39% of its holdings during a period of outflows in mid-2022. These findings emphasize the urgent need for policy considerations to address financial crises within the cryptocurrency ecosystem.

## Bitcoin (BTC) $27200 (+0.15%) - Neutral Outlook

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Last Friday, <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> (BTC) experienced a significant drop below the Ice zone range of 27265 to 26970. This drop has potentially formed a low point that could be considered a minor sign of weakness (mSOW) according to the principles of Wyckoff. However, for BTC to experience a substantial upward rebound, it is crucial for the daily trading volume to also increase. Without an increase in volume, it is likely that BTC will enter a prolonged phase of accumulation, with prices ranging between 26795 and 25818. Should there be a notable increase in trading volume, it is probable that smart investors will target the previous buying climax range of 29885 to 31015, potentially even reaching as high as 32255.

**Overview:**

- ***Closest daily support zone: 27150 - 26970***
- ***Closest daily resistance zone: 27660 - 27790***
- ***Key Level: 28420 (Weekly High between Dec. 21 - 28, 2020)***

<br> **Daily Resistance zones**

1. 27660 - 27790
2. 27970 - 28420
3. 29095 - 29475

<br> **Daily Support zones**

1. 27150 - 26970
2. 26795 - 26700
3. 26380 - 25818

## Macro: Stagnant Stock Market, US Default Drama, And Low Equity Volatility Concerns

Investors eagerly awaited clarity on whether Washington lawmakers would reach a deal to prevent a US default, leading to a stagnant stock market. Equities saw modest gains before a meeting between President Joe Biden and House Speaker Kevin McCarthy, although mixed signals were being sent from both sides. Treasury Secretary Janet Yellen emphasized the urgency of addressing the federal debt limit to avoid running out of cash by June 1.

Earlier, US stocks experienced a dip due to a significant decline in New York manufacturing data. This economic weakness is expected to impact the Federal Reserve's stance on interest rates. Market participants closely monitored upcoming earnings reports from retailers, with Walmart being of particular interest. The market lacked conviction as it grappled with earnings, economic data, and political discussions surrounding the debt ceiling.

Some analysts expressed concerns that low equity volatility might indicate market complacency, despite warnings of potential volatility arising from the debt-ceiling impasse. Wall Street strategists, including those from JPMorgan Chase, Morgan Stanley, and BlackRock Investment Institute, cautioned about the potential impact of the debt showdown on market volatility.

Looking ahead, Asian equities were predicted to have a mixed opening as traders awaited progress in Washington's negotiations to avoid a US default. Futures in Japan and Hong Kong suggested early gains, while Australian stocks were expected to open flat. In Asia, investors focused on China's central bank injecting long-term liquidity into the financial system, hoping it would stimulate post-pandemic economic growth.

On the other hand, Japan exhibited a positive outlook for equities, driven by solid fundamentals and expectations of structural changes. The Reserve Bank of Australia's release of its May interest rate meeting minutes held significance for understanding the nation's monetary policy direction amid global inflation concerns. Meanwhile, the decline in New York manufacturing data further supported the dovish stance of the Federal Reserve.

<div class="blog-details-info">
<div>Author:** Peter L. **, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>