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▲ Virtual asset decline/ChatGPT generated image
The cryptocurrency market continued its bearish trend, pushed back from key resistance levels. As Bitcoin (BTC) encountered resistance at major price points, a contraction in spot demand combined with a shift in funds led to increased downward pressure across the market.
According to BeInCrypto, as of April 23, the total cryptocurrency market capitalization was recorded at $2.57 trillion, a 0.75% decrease from the previous day. Bitcoin fell by 0.77% to $77,701, failing to break through the $79,474 resistance level formed the previous day. During the same period, among major altcoins, Ethena (ENA) plummeted by over 6%, leading the decline amid instability in the DeFi market.
Behind the market downturn is a shift in funds. While the S&P index closed higher, the cryptocurrency market showed weakness, suggesting a recurring pattern of funds moving into the stock market. Indeed, since April, there has been a continuous trend where S&P's rising days coincide with a bearish trend in cryptocurrencies.
Technically, the market has also been pushed back from key resistance zones. The total market capitalization's rise was limited around the Fibonacci 78.6% retracement level of $2.56 trillion, with short-term upper resistance suggested at $2.65 trillion. Conversely, if the $2.56 trillion support level breaks, there is a possibility of further decline to $2.49 trillion, and then to the $2.44 trillion range.
This correction is evaluated as having exposed the fragility of the market's recovery. The recent rebound heavily relied on an increase in Bitcoin perpetual futures positions, while spot demand consistently showed a decreasing trend. The analysis suggests that a structure where leverage-based gains are blocked by resistance leads to a rapid decline has formed.
Bitcoin also showed a similar trend. The Relative Strength Index (RSI) recorded 63.43 as of April 22, maintaining bullish momentum, but the price remained at $79,474, showing a lower increase compared to previous highs. The reduced upward potential despite similar momentum indicates a weakening market structure. On-chain data also confirmed that the recent increase was driven by derivatives demand, not spot demand.
In the short term, if Bitcoin breaks above $79,474, there is room for further upside, but conversely, if it closes below the Fibonacci 23.6% retracement level of $74,881, downward pressure could extend to $72,039, and then to $69,743.
Ethena amplified its losses amid the DeFi market shock. The price dropped to $0.104, failing to hold the Fibonacci 50% retracement level. The cup and handle pattern remains intact, but the handle's correction has exceeded the expected range. However, a decrease in selling volume suggests some possibility of a short-term rebound.
Across the DeFi market, total assets deposited decreased by $14 billion in 48 hours due to the aftermath of the KelpDAO hack. Specifically, $10 billion in funds exited from Aave alone, exacerbating market instability.
Ethena's ability to recover $0.106 is identified as a key variable determining its short-term direction. If it then breaks above $0.122, the bullish pattern could strengthen, and a breakthrough above $0.144 suggests the potential for full pattern completion. Conversely, if it falls below $0.099, the bullish scenario weakens, and further decline to the $0.076 range is possible.
*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*
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