Crypto Week: Echoes from 2008 Cooled Investors

The Crypto market is seen to be booming as Bitcoin prices rose by 19% and Ethereum coins added 50%. Major cryptocurrencies have lost more than 50% of their highs since the beginning of June, so a recovery was expected. The major question now is whether the bulls can hold onto gains? There are a few chances for this to become a reality.

In order to assess the Crypto market’s trends we have to look at the Bitcoin price chart, which would designate the rest of the market. BTC prices are moving inside an upward channel with the lower margin designated by $17,500 and $18,900 previous lows. Such a formation is likely to be temporary before the price continues to move alongside the global downward trend. The price is likely to spike over the upper margin of the channel to return back inside the channel and plunge below the lower margin. So, the first price target is seen at $17,600 per coin.

Ethereum prices are moving sweepingly compared to BTC and they are above the upper channel margin. Further price dynamics of the ETH is restrained by BTC movements. Fundamental factors are not greatly affecting digital assets, and the news of Proof-of-Stake protocol that is expected to be introduced in the Ethereum network in September, could hardly change price trends.

The bankruptcy of the 3AC Fund continued with more than $2.8 billion claims adding some new claimants like Coinlist, Algorand, Moonbeam Network, and the Digital Currency Group. The Coinlist itself has a poor reputation because of rumours about the manipulation of clients’ funds that were collected at the launchpad stage. These funds could be used to credit other cryptoprojects, though this matter should not worry anyone in the cryptomarket right now but they should be prepared for the fact that financial troubles of major institutional players in the market will probably have long-term consequences.

A general sentiment in the financial markets is rather pessimistic amid fears of nearing debt service troubles. These troubles may result in CDS (Credit Default Swaps) fees on some assets. Such credit events occurred in 1998 and 2008. The price of CDS surged dramatically to March 2020 levels, signalling an overall pessimistic sentiment in the market.

Rising costs of Dollar funding and the strengthening of the Greenback itself may prompt many defaults, outside and within the Crypto market. Fears over real estate market bubbles and second-hand cars market troubles may contribute to the worsening situation making investors shy away before the situation improves.