/ Crypto Weekly

The fall of FTX shreds crypto markets but a little SUN-shine rained down on retail

The power structure of crypto entered mass turmoil this week as news of growing FTX insolvency risk spiraled into bankruptcy, alleged fraud and max pain across retail as well as Wall Street. The next-level shitcoinery allegedly engineered by Sam Bankman-Fried and the crippling results are leading some to believe that a new era of decentralization is now upon us.

At a glance...




  • Crypto titans go head to head
  • SBF’s quick demise shocks the world
  • Centralized exchanges hurriedly publish their proof of reserves
  • Tron Founder Justin Sun sends a lifeboat
  • FTX Contagion begins with BlockFi announcement


Top Market Trends:

US regulators ironically moved quickly and aggressively to condemn FTX’s opaque balance sheets and lack of crypto regulation. Meanwhile, Tron Founder Justin Sun drummed up goodwill and brand loyalty by announcing he would honor tokens under his realm 1:1 for those holding the tokens on FTX. TRX jumped 5% following Sun’s announcement while BTC, ETH, and most altcoins languished amid the week’s negative press.

  • The Wall Street Journal reported that Alameda’s balance sheet included $10 billion in funds loaned by FTX. Almost half of Alameda’s total assets were denominated in FTX’s exchange token, FTT.
  • Binance removed $500 million from FTX in one day on the news from Coindesk that FTX was facing a liquidity crisis, further exacerbating a bank run that had already started.
  • CZ Binance entered buyout talks that ended abruptly, possibly due to the discovery of an $8 Billion hole. Binance and 7 other exchanges published a Proof of Reserves statement shortly after Binance reneged on the FTX buyout.
  • Institutions were affected as well in this go-around, with Grayscale Bitcoin Trust reporting a 41% markdown, and big investors Sequoia Capital, Blackrock, and others are reporting their exposure and subsequent losses.

Movers and Shakers

Top 7-day Gainers:

  1. MATIC +13.9%
  2. PAXG +8.3%
  3. BTSE +6.0%
  4. XAUT +3.9%
  5. LTC +1.5%

Top 7-day Losers:

  1. FTT -85.7%
  2. TKX -52.0%
  3. SOL -40.7%
  4. WBT -32.3%
  5. HT -30.2%

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Technical Summary

Bitcoin Pulse
Positive sentiment around Bitcoin was reserved for crypto diehards this week, who continue to be optimistic about Bitcoin’s future. The fallout from the FTX downfall has not yet played out, but most would agree that institutional investors will likely be hands-off on BTC investing in the near-term.

  • Bitcoin fell sharply to below $16k on Tuesday and Wednesday following the FTX developments, but managed to retrace to over $17.5k on Thursday.
  • Hard wallets and getting Bitcoin off exchanges were hot topics, as the weaknesses of the world’s #2 centralized exchange were exposed.
  • After BTC fell 20%, Bitcoin miners were operating at a higher cost over earnings, possibly nearing a capitulation phase.

BTC - Macro Timeframe

As expected, the floor price that had acted as support for the past 5 months ($17,585) once being run led to a HTF relief rally. This was initiated after price had reached the 50% of both the Monthly fair-value gap from 2020 and the Monthly bullish order-block from 2018.

BTCUSD-MACRO

Next level: $14,000

Many naturally expected that these levels would be the next levels of support for the market as either short term relief rally minor support or strong long term support.

If we were to see these levels only act as minor short term support then our sights are set on the $14,000 level which is the natural next immediate level of support.

At the $14,000 level we have a strong support cluster comprised of:

  • Bullish monthly order-block
  • Monthly fair-value gap closure (re-gaining of efficient price levels)

If current price levels are to act as a form of major support then we are likely to see a move back to the $20,500 level before meeting any HTF resistance.

BTC - Micro Timeframe

On the LTFs the picture is much more clear.

After the HTF mitigation on the 10th we saw price aggressively move back into premium of the 4H current range of importance at which point price:

  • Mitigated both bearish order-blocks in premium
  • Took 1H buy side liquidity
  • Formed a 1H manipulation pattern inducing those who got short at the $18,000 level

Price then started to make its way back down into discount as would be expected from the cluster of resistance being met in premium.

Now we wait to see if the 1H sell side liquidity along with the first bullish order-block in discount will be enough to support a deeper HTF retracement back into more premium levels.

Or if bulls are all exhausted and the HTF bearish momentum takes over even further.The 50 EMA is also acting as resistance for this but a break and retest may be a further signal of bullish pressure entering.

BTCUSD-MICRO

Are bears in control?

Altcoins on the Move

FTT and TRX had a brief holiday, spiking after CZ Binance’s buyout announcement, only to fall a day later when the deal fell through. Over the 7-day, FTT fell hard, losing 85% of its value and giving traders flashbacks to the LUNA crash.

  • Ethereum flirted with the $1000 support level following the FTX news, but then began a correction to the $1250 zone.
  • Analysts speculated that Alameda may have to sell its SOL tokens (worth over $1 Billion) to raise liquidity. Retail traders rushed to get ahead of the anticipated sell pressure, causing SOL to plummet by 44%.
  • Aside from stablecoins, Polygon’s MATIC was the only top 100 altcoin to perform this week, up 12.6%.

ETH-USD-MACRO

A potential bottom below $1,000?

Seeing the sell off unfold this week due to the liquidity issues FTX faced, we saw price run the low that was acting as our price support for the past month.

This coincided with:

  • Mitigating the cleanest 1D bullish order-block in discount
  • Reaching a deep discount of the overall range since June.
  • Closing the last HTF fair-value gap available

Having done so, price had taken a form of HTF liquidity followed by mitigating a form of strong demand to act as support.

Price then proceeded to retrace into the aggressive bearish move as would be expected if this support level were to be respected. Now we wait to see if price will retrace deeper into premium aligning with the 50 EMA to fuel the next bearish move or if this was a last chance hope for buyers to try to support price from a free fall.

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Disclaimer: The content of this article is for general market education and commentary and is not intended to serve as financial, investment, or any other type of advice.