KVB Market Analysis | 26 Nov: Bitcoin Drops Amid Liquidations and Long-Term Holder Selloff

Product: XAU/USD

Prediction: Decrease

Fundamental Analysis:

Reports of an upcoming ceasefire agreement between Israel and Hezbollah, along with Trump nominating Scott Bessent as the U.S. Treasury Secretary, reduced gold's appeal as a safe-haven asset, causing prices to drop by over 3%. Spot gold closed on Monday with a sharp decline of $90.53, down 3.33%, at $2,625.32 per ounce—the largest single-day drop since June 7. The development of the Middle East situation drove this significant drop in gold prices. The potential ceasefire between Israel and Lebanon added heavy selling pressure on gold. According to reports, the draft agreement includes a 60-day transition period during which Israeli forces will withdraw from southern Lebanon, Lebanese forces will deploy near the border, and Hezbollah will move heavy weapons north of the Litani River. The draft also proposes a U.S.-led monitoring committee to oversee the agreements implementation and handle violations.

Technical Analysis:

On Monday, golds rally came to a halt as sellers pushed prices below $2,700 per ounce, dropping further to break below $2,630 per ounce. With bears taking control and breaking the $2,630 level, the next support for gold is at $2,600. If this level fails, prices could fall to the 100-day moving average at $2,562 per ounce, followed by the November 14 low of $2,536 per ounce. If buyers regain momentum and push prices back above the 50-day moving average, they may target $2,700 per ounce again. A breakout above this level could aim for $2,750, followed by the all-time high of $2,790 per ounce. However, oscillators like the Relative Strength Index (RSI) have turned bearish, indicating that sellers are currently in control.

Product: USD/JPY

Prediction: Increase

Fundamental Analysis:

This leads traders to reduce their bullish positions on the US Dollar (USD) after its recent rally to a two-year high, shifting some interest to the lower-yielding Japanese Yen (JPY). However, uncertainty about the Bank of Japan's (BoJ) plans for raising interest rates, combined with the current risk-on market sentiment, may limit significant gains for the safe-haven JPY. Additionally, expectations that US President-elect Donald Trump's policies could boost inflation and slow down the Federal Reserve's (Fed) rate cuts could support US bond yields. This, in turn, benefits USD bulls and provides support for the USD/JPY pair.

Technical Analysis:

From a technical view, the USD/JPY pair staying below the 100-period Simple Moving Average (SMA) suggests a potential for further decline. However, the pair may find support around the 153.30-153.25 zone. If this level is broken, the next key support is the 153.00 round figure. A decisive break below this level could encourage more bearish momentum, pushing the pair toward mid-152.00s and eventually to the critical 200-day SMA near 152.00. On the upside, the 154.00 level now acts as an initial resistance, followed by the recent session high near 154.40. If the pair gains momentum, it could rise to the 155.00 psychological level and further to the 155.40-155.50 zone. Sustained strength above this area could drive the pair past 156.00, potentially retesting the multi-month high near 156.75 reached on November 15.

Product: BTC/USD

Prediction: Increase

Fundamental Analysis:

Although Bitcoin experienced a short-term rebound, it has yet to recover the losses from the previous session. The sell-off, triggered by liquidations, is evident in the trading volume data from major centralized exchanges, especially those offering perpetual futures. Apart from forced margin liquidations, long-term holders (LTH) of Bitcoin are another major factor in the current sell-off. Analysts point out that holders who have owned Bitcoin for 6 to 12 months are the primary sellers. Their average cost basis is 71% higher than the current market price, around $57,900. Financial markets maintain a delicate balance between buyers and sellers, and the current trend indicates a shift in favor of short-term bearish sentiment over spot and leveraged long positions. With rising liquidations and Bitcoin's price falling toward $90,000, short positions have surged. This has driven Bitcoin's funding rate from 0.019 to a peak of 0.04.

Technical Analysis:

Bitcoin is currently seeing profit-taking by short-term buyers, pulling its price down to the upward trendline. If the price bounces back strongly, it shows that buyers are stepping in with every small dip. Bulls may attempt again to push Bitcoin above $100,000. If they succeed, the price could rise quickly to $113,331 and then to $125,000. On the other hand, breaking below the upward trendline might bring the price down to the 20-day moving average at $89,213. This is a critical level for buyers to defend, as falling below it could drag the price further down to $85,000.