Are cryptocurrencies positioning themselves for soaring prices? | News

Bitcoin fell below $ 20,000 after the weekend, but the bulls are once again trying to protect the market from stronger drops. Will demand be strong enough to reach the bottom of the current level and start moving upwards?

  • The stop at the sharper decline at $ 19,000 once again showed the relative strength of buyers with valuations below $ 20,000. It seems that only a very negative market event can push the price of bitcoin well below these levels.

  • Although the market situation is very turbulent and the return of positive sentiment to risky assets seems almost unrealistic, in the past such circumstances sometimes signaled a bottom. According to Howard Marks, manager of the OakTree fund (managing more than $ 150 billion), the current circumstances may lead some “intelligent minds” to conclude that the can is so bad it only gets better “and start buying again. However, the mechanism also works the other way around. As asset valuations plummet after huge spikes and a lot of positive news, sellers find that “it’s so good it can only get worse,” illustrating the psychology of volatility and exaggerated market responses.

  • Cryptocurrencies are influenced by many factors related to the situation and sentiment in the wider market, from stocks to bonds to central bank decisions. Today’s data on inflation in the US may lead to greater volatility in the markets. The result below analysts’ expectations may be favorably received by the markets and herald a change in the aggressive policy of rate hikes by the Fed, which is likely to start in September – a hike by 75 basis points in July seems reasonable even with falling inflation.

  • Tomorrow we will know the results of the US banking sector, which will be published by JP Morgan and Morgan Stanley. Banks ‘results, combined with analysts’ statements and assumptions for the rest of the year, could lead to increased volatility in the markets – including cryptocurrencies, which would welcome the return of stronger Wall Street after weaker quarterly results for Q1 2022.

  • Vasil’s hard fork in the Cardano test network went almost unnoticed in terms of cryptocurrency valuations, confirming the bad sentiment in the cryptocurrency market. At the same time, however, it appears that the network is about to reach a milestone in its development, which could potentially help it stay at the top of the market when the cryptocurrency market rises again. Currently, Cardano’s capitalization is around $ 14 billion compared to over $ 120 billion Ethereum, despite the fact that transactions on the Cardano network are cheaper and the network is more scalable. The network recently recorded a record number of processed smart contracts and is approaching 3,000.

The number of smart contracts processed on the Cardano network is growing exponentially. Source: Cardano Blockchain Insights

  • At the same time, however, Cardano is struggling with a network effect that favors the ETH network, which continues to enjoy increasing interest from developers, customers and institutions.

  • Weak quarterly earnings of US companies and still rising inflation could be another “slippage” not only for indices such as the NASDAQ, but also for other risky assets such as Bitcoin, Ethereum and smaller altcoins.

  • The current valuations of bitcoin and many other cryptocurrencies, some of which have lost up to 90% of their highs, could prove very attractive to many bulls if the Wall Street earning season exceeds analyst expectations and the Fed starts improving Monetary policy slow down. Then there may be a very dynamic growth, accompanied by the rapid return of many investors who have left the market due to the phenomenon commonly known in the crypto industry as FOMO, i.e. fear of losing an opportunity. “

Bitcoin on the H4 chart. The major cryptocurrency is in a sideways trend as it fell below $ 18,000. At the same time, he managed to gain almost 10% from the bottom. We also see higher and higher lows that could herald an inevitable rebound. On the other hand, a very strong offer was launched at double the $ 22,000. The short term picture in the chart looks mixed. Similar situations historically started a very large two-way price move, which will also coincide with the upcoming US macroeconomic data and the season of results on Wall Street. Source: xStation 5

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The author is not currently investing in these securities or underlying instruments.

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