While the Crypto Crash has been all over the news, one investor has been predicting it will be the “mother of all crashes” due to the prevailing FOMO (fear of missing out) and overbought sentiment. Michael J. Burry, the founder of Scion Capital, who is portrayed by Christian Bale in the movie Big Short, has previously warned of a “mother of all crashes”. He famously shorted the mortgage bond market in 2007 using CDO swaps and was one of the first investors to profit from the subprime mortgage crisis. He has also pointed out the leverage in crypto as the main reason for these moves.
Market pressure on cryptocurrencies
In recent weeks, the market has been under intense pressure as investors grapple with concerns over rising inflation, geopolitical tensions, and other factors. A major catalyst for the recent drop in cryptocurrencies has been the call for a crackdown by Russia’s central bank, which proposed banning mining and use of cryptocurrencies on its soil. This ban could affect the value of the cryptocurrencies in the country, threatening financial stability and the country’s monetary policy sovereignty. Despite this, the broader market has remained relatively stable, with leading cryptos trading near the $39,000 mark.
While there are a number of risks for cryptocurrencies, the most important is that if they do not have a use case, their value will be diminished. For example, a rare metal miner’s coin will rise in value if it is used in the next iPhone, but if it isn’t, the value will diminish. Likewise, if the United States government decides to ban cryptocurrency ownership, most users would likely transfer their holdings offshore, lowering the value of cryptocurrencies.
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Cardano (ADA) correction lower sharply after testing USD 1.480 resistance zone
The last few weeks have seen a strong rejection of $0.9150 for Cardano (ADA) and a complete pairing back of gains. This rejection momentum has fuelled bears to push the price lower even further. The US dollar’s strength has likely contributed to the price correction, and the next resistance zone is $0.6900, which coincides with ADA’s lows in February 2021.
ADA price has entered a distribution zone around $0.50 and is preparing to continue its correction lower. After this, it is expected to rebound to the $1.00 level. If it doesn’t break above the support level, it will start a downward correction. It will probably continue a 30% correction down to $0.50 before recovering to $1.00. It has not been that long since the ADA price hit its multi-month high of $1.480.
ETH and XRP remain well bid above USD 250
Bitcoin price is flirting with the USD 57,000 level, Ethereum is testing USD 4,600 and XRP is well bid above USD 0.85. In the meantime, most of the major altcoins are showing signs of bullish momentum. ETH has climbed back above USD 1,800, while XRP/USD broke USD 0.550 and is eyeing an upside break above USD 0.550.
Cardano (ADA) failed to hold gains above USD 0.850 and USD 0.920, but it has bounced back from the USD 2.85 level. ADA is likely to extend gains above USD 1.500, but further losses could trigger a decline towards USD 1.332. Litecoin (LTC) has rebounded above the USD 200 support level. A breakout below USD 205 could see Litecoin test USD 212 and USD 230. Depending on the news, LTC could test the USD 250 level.
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