Marcus Sotiriou, Analyst at the UK based digital asset broker GlobalBlock
Bitcoin (CRYPTO: BTC) was largely unaffected by the S&P 500 yesterday, which dropped 2.44%. This shows significant resilience from Bitcoin, as on-chain analyst Willy Woo notes that “Price in relation to on-chain demand from both speculative and HODL category of investors are now both at peak oversold levels.” He said “the last time this happened was October 2020. The time before that was at the bottom of the COVID crash. The time before that was Jan 2015 (the bottom of the 2014 bear market capitulation). And before that was Feb 2012 (at the start of the 2012-2013 bull run).” This data suggests that the market could be due for at least some short-term relief.
In addition, U.S. January employment data gets released today. If it is underwhelming it should help Bitcoin push up to test the $40k level, as it would signal to the Federal Reserve that there is less inflation to take action on. Bitcoin is currently facing strong resistance currently though at around $38,000, as it tests the trend line from all-time-highs for a 5th time.
I think employment is likely to come in weaker than anticipated due to the effects of the Omicron Variant in January, hence potentially leading to market wide relief for this month. However, I think if this does occur, I expect it to just paint over the cracks as supply chain issues are persistent at the moment.
After the Wormhole hack on Wednesday, Jump Trading restored every user’s funds, totalling to over $320 million. This hack on Wormhole Bridge, which is a cross-chain bridge from Solana (CRYPTO: SOL) to other blockchains, could contribute to negative investor sentiment surrounding the Solana blockchain, which has had multiple outages over the past 6 months. However, I think the problem lies within bridges themselves, regardless of which blockchain they operate on. Last week there was a different bridge exploit on the Ethereum (CRYPTO: ETH) BSC bridge called Qubit. This is clearly a major risk within crypto, which can be mitigated by withdrawing coins directly from exchanges where possible.
