After Two Red Weeks, Bitcoin Is Nearly As Oversold As In March 2020

Bitcoin closed the week with the second-largest red candle in its entire history, testing lows near the $47k price zone following an ATH of $64K recorded in the previous week.

Overall, this was a tough week for markets across the board. From stocks to cryptocurrencies, traders experienced an episode of collective panic marked by the rumor that Joe Biden would be preparing a bill to increase capital gains taxes by almost 100% for all those generating more than $1 million in profits.

BTC Registers Its Second-Largest Red Candelstick Ever

The news caused a widespread drop in the most important financial indices in the United States and other countries. And cryptocurrencies had an even worse reaction, with Bitcoin confirming its downtrend after breaking the support of a channel initiated in late 2020.

Today’s drop puts Bitcoin at $48,000 with lows of $47044, according to Tradingview data. For the first time, the 10-period moving average and the 55-period moving average are crossing to the downside, which could indicate that the bullish trend is getting weaker, at least temporarily.

Price of Bitcoin in weekly candlesticks.
BTCUSD Weekly candlesticks. Image: Tradingview

Bitcoin lost just over 5% in the last 24 hours, and 13% over the previous 7 days. With near $8.000 lost, this would be the most significant gross price decrease in history, even though it has seen worst declines in terms of price proportions. To put things in context, a $10 drop when Bitcoin was traded at $100 was proportionally worse than a $1000 drop when Bitcoin was priced at $60,000.


Bitcoin Has Not Been This Oversold Since The 2020 Panic Episode of the COVID-19 Crisis

Indicators show that traders have not yet recovered from the panic episode of the previous days. Bitcoin has not been this oversold since mid-March last year, when fears of a widespread crisis due to the coronavirus pandemic drove markets to the subsoil.

The RSI is an metric that signals whether there is a balance between buyers and sellers. It is currently in the order of 25 points out of 100. That is, there are 25 people placing buy orders vs. 75 people placing sell orders for the same value.

Price of Bitcoin, daily candlesticks. Image: Tradingview
BTCUSD with RSI Image: Tradingview

This means that traders are currently looking to exit their positions to increase their holdings of fiat, commodities, or perhaps even altcoins.

A similar sentiment is shown by the Crypto Fear & Greed Index, which is at its lowest level in a year, indicating that investors’ fear of losing money with Bitcoin hasn’t been this strong since the March 2020 crash.

Crypto Fear and Greed Index
Crypto Fear and Greed Index. Image:

However, a low RSI is -generally- a bullish sign. In theory, markets tend to achieve equilibrium after such periods of euphoria with a correction to the contrary.


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Polygon (MATIC) jumps ahead as the race for Layer-2 adoption picks up

Recently layer 1 solutions like the Solana (SOL) and Cosmos (ATOM) have grown in prominence thanks to each network’s faster transaction times and lower fees when compared to the Ethereum network. An even greater focus has fallen on layer 2 solutions that can help Ethereum keep up with the competition as it continues its process of switching to proof-of-stake. 

One project that has seen a steady rise in user activity and transactions over the past 2 months is Polygon (MATIC), a platform for Ethereum scaling and infrastructure development.

MATIC/USDT 4-hour chart. Source: TradingView

Data from Cointelegraph Markets and TradingView shows that since hitting a low of $0.26 as the market sold off on April 18, MATIC price has climbed 50% to $0.39 as adoption of this expanding L2 platform begins to ramp up.

Popular projects migrate to Polygon

Following the early February announcement that the Matic Network would be rebrand to Polygon as part of its effort to become the go-to L2 aggregator for the Ethereum network, the protocol has seen a significant increase in user and project adoption.

Since the rebrand, multiple decentralized finance (DeFi) and nonfungible token-related projects have made the decision to integrate with Polygon to take advantage of its fast, low fee environment.

Some of the more significant DeFi integrations include the decentralized exchange SushiSwap (SUSHI) and Curve Finance (CRV), while OpenSea, Decentraland (MANA) and Aavegotchi (GHST) are large NFT communities that now utilize the Polygon network.

On March 31, the popular DeFi lending platform AAVE announced that it was exploring “new scalability frontiers” with Polygon, and the subsequent launch of AAVE on the L2 solution rapidly grew to $1 billion worth of liquidy and more than 7,200 users just 10 days after launch.

DEX volume increases

Popular decentralized exchanges like Uniswap and SushiSwap were a major catalyzing force for the growth of DeFi and the cryptocurrency sector as a whole over the past year, demonstrating the importance of a properly functioning DEX for the growth of the ecosystem.

While SushiSwap is one protocol that has made integrations with the Polygon network along with numerous other blockchains, the QuickSwap DEX is a project that is solely focused on increasing available liquidity for the Polygon ecosystem.

QuickSwap liquidity and 24-hour volume. Source: QuickSwap

As seen in the charts above, liquidity and trading volume on QuickSwap saw rapid gains beginning in late February and this trend continued throughout March. Over the past two weeks, there has been a noticeable uptick in volume on the platform and this corresponds with the recent Polygon adoptions.

Increased activity on decentralized exchanges is partially due to the growing list of projects now available on Polygon. A quick scroll through the project’s Twitter feed shows a long list of recent integrations including IoTeX (IOTX), Everipedia (IQ), Gelato Network (GELATO), Just Bet (WINR) and Umbrella Network (UMB), to name a few.

Going forward, it’s likely that a growing number of Ethereum-based projects will look for a faster, low-fee environment that also allows them to stay on the top smart contract platform. If they shift to Polygon, there is a chance of significant upside potential and the current growth in MATIC price and the rising TVL of QuickSwap both serve as proof that the protocol is a strong layer-2 contender. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.