The cryptos
market is going through hard times as stagflation is becoming real. Investors
are shying away from risky assets and concentrating on safer assets related to
the U.S. Dollar. U.S. Treasuries yields are rising rapidly and prompting
additional interest to the Greenback.
The last
seven days were quite tense as bulls were trying to take the lead in the Bitcoin
market but were unsuccessful as fundamentals and the technical picture were not
on their side, while bears acted in an opportunistic way and were caught in a
trap. Bitcoin has been channeling to the
upside since May 1 with a low at $37,400 and is now in a correction mode,
towards the primary downside direction. A false breakthrough of an upper margin
of this channel at $38,900 has occurred, while prices quickly rebounded towards
$35,100.
However, a
continuation of a downward direction would be very tiring for bulls. Thus, the
recent price spikes are of paramount importance and should be treated as good
opportunities to open short positions or for profit taking considering money
management.
Altcoins
are suffering badly, while Fantom (FTM) and Harmony (ONE) lost more than 20% over
the last seven days. If Bitcoin continues to slide, market cap of altcoins may
plunge down dramatically. FTM may drop by an additional 50% to $0.38 where most
trading volumes occur. Other top altcoins also face similar situations.
Investors should be ready for a possible further contraction.
The
correction on the crypto market may last for months and turn to another “crypto
winter”. So, excessive optimism over digital assets should not be justified. On
the other hand, there is no reason for panic as heavily involved investors
continue to finance startups. Some of these investments include $300 million in
the private infrastructure protocol Nym from Polychain together with Huobi
Incubator and a16z, and the Asymmetric Fund amounting to $1 billion from FTX,
Circle and other prominent market players.
While
Bitcoin was pitching within the $33,000-$42,000 area, a significant number of
coins were bought by new investors, making up 70% of the crypto wallet
profitable. This is good news as on the bearish market in 2018-2019 this
indicator was below 50%. However, to bring it to 60%, Bitcoin should drop below
$33,000 and this may happen intraday as crypto prices have enough energy to
hover between 10-15% within one single day. Thus, all newcomers as well as the
rest of crypto enthusiasts should be cautious.