Crypto Week: Bulls Have been Sent to the Slaughter

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.