Cryptozyme is in its ninth week and bitcoin still can’t shake off the freezing cold. Market indicators glow yellow and red for the largest cryptocurrency by market capitalization, which lost a third of its value in just two months, writes Trud bg.
So what’s next? So far, there have been five such winters since 2017 and three since 2021. Last year’s two crashes lasted 14 and 10 weeks, respectively, wiping 45% and 47% off the price of bitcoin, respectively. If they can be considered normal, then the latest drop in the price of the token – by 36% in eight weeks – still has a long way to go.
“Bitcoin is simply not attractive to retail investors at the moment. No one really sees this potential for bitcoin to bring a 10-fold return, ”said Joseph Edwards, head of financial strategy at Solrise Finance.
Indeed, the macro-environment is far from supportive of a class of assets strongly perceived as volatile, risky and vulnerable in the face of inflation. And while worries about rising interest rates around the world and geopolitics are driving US stocks closer and closer to bearish territory, cryptocurrencies are nobody’s shopping list.
And yet, even in the icy wasteland, there are signs that the crypto-king is about to return.
Bitcoin draws strength from the rest of the crypto market – for example, its image provides some reassurance to investors who are leaving alternative coins, including stablecoins, considered too risky after the collapse of TerraUSD in early May.
The dominance of bitcoin – a measure of the ratio between its market capitalization and the rest of the crypto market, reached a 7-month high of over 44%, although its price is declining.
Last week, bitcoin futures recorded their biggest net long position since the contract was offered in 2018, according to CFTC data. This is a signal that traders are preparing for the appreciation of cryptocurrency.
Bitcoin lost half its value since its November 10 peak of $ 69,000. This week, its price is approaching the threshold of 30,000 dollars, after hitting a 17-month low of 25,401 dollars on May 12. The coin remains the largest by market capitalization, but the market value of all cryptocurrencies is now $ 1.3 trillion – less than half of the $ 3 trillion in November.
The Coinglass Fear & Greed index for market sentiment – where 0 is extreme fear and 100 is extreme greed, is around 13.
Ether, the number one cryptocurrency by market capitalization, is hovering around $ 2,000 and depreciating by about 60% from its $ 4,868 peak on November 10.
Bilal Hafez, chief executive of research firm Macro Hive, cites $ 2,300 and $ 2,500 as key levels, warning that failing to keep prices above one of the two levels in the short term would be a bearish signal.
The market is scared. The total volume of the spot market for all cryptocurrencies on the leading exchanges fell to 18.4 billion as of Monday (May 23), which is less than half of the $ 48.2 billion observed on May 14. This is the largest volume for 2022, according to data from the research and news site The Block.
Glassnode said on May 9 that bitcoin, valued at $ 33,600, would leave 40% of investors “under water” – when the asset is cheaper than when it was bought.
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