A Week to Remember, A Week to Forget - Flash Update

Well, that’s one way to head into the weekend. Without giving investors and traders much chance to catch their breath, the broader crypto market decided to take another plunge to close out an already rough week. Despite today’s pain, we decided to put together some thoughts highlighting the drivers of this latest move, and where the market may be overcorrecting as everything comes under pressure.

• For starters, BTC and equities have moved almost perfectly in sync over the last few trading sessions, and today’s move was no different.

• The last week has been particularly fretful as BTC attempted to stage a recovery on Jan. 20, but it was clearly short-lived. After price was rejected at ~$43K, BTC quickly found itself in a tight spot, having lost its bid at the $40K support.

• Today’s violent downside move was exacerbated in part by a series of liquidations that triggered as prices started to fall, putting BTC on a path towards the lows it made back in the summer of last year.

• We can see the implication that these price declines have had on the futures market with the above liquidation chart. Note how the liquidation amounts spike when key psychological levels are lost, a prime example being when BTC dipped below $40K.

• Note: since key crypto exchanges like Bybit and Binance have altered and changed the way in which liquidation data is reported, we can only estimate leverage contractions.

• S