Chaos erupted in the crypto market yesterday as over $600 million worth of leveraged trades were liquidated.
The forced sell-offs were triggered by a sudden 10% drop in the price of flagship crypto Bitcoin from around $45,000 down to $40,750. Similarly, second-largest cryptocurrency Ethereum plunged from $2,320 to $2,100 in the span of hours.
The sheer magnitude of long liquidations shows traders were caught completely off-guard by the abrupt reversal, with overly bullish bets getting decimated in the process. The violent flash crash left many portfolios deep in the red.
However, Bitcoin managed to rebound from below $41k to trade slightly above $43k at the time of writing. Crypto analytics platform Santiment reported that the drop to $42.2K has resulted in the highest Bitcoin trading volume since March 17th. There is potential for daily trading volumes to surpass 2023 highs. The volatile price action indicates increased activity and polarity among crypto traders.
Crypto analyst Crypto El Presidente believes yesterday’s sharp Bitcoin sell-off presents “an extremely good buying opportunity” despite negative sentiment.
He explained that the daily candle’s percentage drop was the 4th largest liquidation event since the FTX collapse. Analyzing the chart, he pointed out that the two largest down candle days happened immediately after FTX’s implosion which rattled the whole crypto market.
Out of the five biggest single-day selloffs since November 2022, yesterday’s candle marked the bottom. El Presidente believes all five severe liquidation events presented prime buying opportunities in hindsight.
He elaborated that while crashes never feel like opportune times to buy in real-time, acting counterintuitively pays off hugely. The analyst closed by saying: “once you learn to think and act in spite (or in opposition) of how you feel, you’ll become much more in sync with the markets. Bullish.”
Similarly, analyst Bluntz tweeted that yesterday brought “the fud we needed but don’t deserve. Nice flat looks complete on #btc here with a beautiful capitulation volume candle to top it off. We should send to new highs now.” In crypto slang, “fud” stands for fear, uncertainty, and doubt.
Bluntz believes the heavy selling represented capitulation – indicating that weak hands have sold out and remaining holders have stronger conviction. This cleansing sets the stage for Bitcoin’s next rally.
Technical Analysis and Market Outlook
From a technical perspective, momentum is mixed for Bitcoin. While the MACD line sits below the signal line in bearish territory, the higher Relative Strength Index (RSI) above 55 indicates ongoing bullish momentum. Given rising MACD histogram bars, upside momentum could return soon.
Major support sits around $38K where Bitcoin previously found resistance. Below that lies the psychological level of $35K. On the upside, Bitcoin faces resistance around $45K and $50K.
Yesterday’s flash crash appears to have been sparked largely by a report from crypto financial services company Matrixport that the SEC would again reject a spot Bitcoin ETF in January. However, this prediction quickly drew skepticism from industry analysts.
Bloomberg’s senior ETF analysts Eric Balchunas pushed back on the Matrixport report. Balchunas tweeted that he’s heard nothing but optimism about Bitcoin ETF approval from SEC officials in recent months. In December, he cited conversations pointing to a spot Bitcoin ETF being approved in early 2024.
Sponge V2 Launch Builds on Viral Meme Coin’s Success
The developers behind Sponge V1, 2023’s viral meme coin sensation, are preparing to launch Sponge V2 in 2024. This upgraded token comes with new utility and incentives that could spark another parabolic rally.
Sponge V1 was arguably one of the most successful meme coins last year, shockingly soaring from a $1 million market cap to over $100 million at its peak. Now the team aims to replicate this fairytale run with the release of Sponge V2 and its new tokenomics. Rather than just paying tribute to the cartoon character SpongeBob SquarePants like the original, Sponge V2 will feature a play-to-earn racing game to boost utility.
The original SPONGE coin price reacted well to the V2 announcement in December, jumping to $0.00055 before cooling to around $0.00045 currently. In the past 30 days, SPONGE has gained 40% as hype builds ahead of the launch.
Innovative “Stake-to-Bridge” Mechanism
Sponge V2 introduces an innovative “Stake-to-Bridge” mechanism that links the new token to the thriving SPONGE V1 ecosystem. To earn SPONGEV2 tokens, V1 holders can stake their current supply which will grant equivalent V2 tokens when the official launch occurs in 2024.
The website bills Sponge V2 as the “Krabby Patty” of community-driven meme coins – “back bigger and better than ever.” Unlike the original token, Sponge V2 launches at the start of the next bull cycle alongside added utility through a play-to-earn racing game.
Showing strong enthusiasm for the upcoming token launch, over $1.6 million worth of SPONGE has already been staked to earn SPONGEV2 rewards.
How to Earn Sponge V2 Tokens
Interested participants can buy or stake $SPONGE using the widget on the Sponge.vip website to receive bonus V2 tokens. Token holders can keep their V1 Sponge staked to earn more Sponge V2 over time.
Here’s a summary of how to earn Sponge V2:
- SPONGE Holders: Stake V1 tokens via the website to secure V2 tokens at launch.
- New Buyers: Purchase and stake SPONGE to automatically earn V2 tokens.
- Current Stakers: Withdraw staked V1 tokens and restake them via the website to qualify for V2.
Since this bridging method is unique in crypto, some key points concern redeeming V1 for V2 at launch:
V2 can only be earned by staking V1 SPONGE
- Buying & staking SPONGE earns a V2 bonus
- Staked SPONGE is permanently locked in V1
- Keep SPONGE staked to increase V2 holdings over 4 years
Play-to-Earn Game Adds Utility
Sponge V2 brings a new play-to-earn game, adding fun and value to the ecosystem. Users can earn SPONGEV2 by playing and ranking on the leaderboard. There will be free and paid versions. Paid credits allow playing to potentially earn more tokens.
With the ability to earn more SPONGEV2 in-game, Sponge V2 unlocks unrivaled value for the meme coin community. Further game details will come on social media soon.
The bridging process and play-to-earn gaming are innovative features that could spark viral interest similar to the original Sponge token last year. The additional utility and incentives around Sponge V2 make it one of the most hotly anticipated meme coin launches for 2024. Its community-driven ethos also gives it an advantage over meme coins backed by VC funds and wealthy founders.
With the right tokenomics and a bit of luck, Sponge V2 could become next year’s standout gainers as the next crypto bull market picks up steam. The meme coin space moves fast, but Sponge has demonstrated its ability to capture widespread public interest. All signs point to the upcoming Sponge V2 outperforming the original by orders of magnitude in the coming years.
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