Bitcoin Holds Fast Over 16K, but Crypto Winter Could Be Prolonged

Bitcoin held steady over its most recent $16,000 support for a 10th consecutive day, even as contagion triggered by the collapse of FTX widened.

Bitcoin (BTC) was recently trading at around $16,600 Friday, roughly unchanged over the past 24 hours. Ether (ETH) was recently changing hands at about $1,200 and was also flat from Thursday, same time.

Over the past seven days, BTC and ETH have declined 1.5% and ETH 4.8%, respectively.

The CoinDesk Market Index (CDI), an index measuring cryptos' performance, barely moved as investors continued to absorb recent events stemming from crypto exchange giant FTX’s filing for Chapter 11 bankruptcy protection last Friday and the latest revelations about its mismanagement.

A note Friday by Coinbase Institutional attributed bitcoin and ether’s resilience in recent days to its “relatively limited” exposure on FTX’s balance sheet, creating a buffer for potential mass liquidations.

“The recent performance of these assets may also reflect implicit recognition that the events at FTX were credit driven, not crypto driven in nature,” Coinbase Head of Institutional Research David Duong and Research Analyst Brian Cubellis wrote in the note.

However, other crypto observers maintain that the continued domino effect following FTX’s fallout is still difficult to gauge. The crypto market capitalization has fallen to under $800 billion, its lowest level since early 2021.

Crypto asset trading firm QCP wrote in a Telegram note Friday that BTC and ETH have been unable to join the huge post-Consumer Price Index (CPI) inflation data short squeeze staged by global risk assets.

The firm said that the underperformance of all crypto assets will remain “until the bulk of uncertainly has cleared up – likely only near the turn of the new year.”

“This changes completely our previous view of a wave four-year-end macro rally that will be led in crypto by ETH,” the group added.

‘Hodlers’ accumulate

Despite overall bearish sentiment, crypto data and analysis firm IntoTheBlock’s on-chain data shows that BTC long-term holders increased their holdings by 180,000 BTC, close to $3 billion, since the FTX collapse.

Lucas Outumuro, head of research at IntoTheBlock, said that historically BTC long-term holders “accumulate strongly in the depths of the bear market” and “begin selling following all-time highs.”

“I would say that is most likely the main strategy Bitcoin believers are aspiring to recreate based on this on-chain data,” Outumuro told CoinDesk.