3 key figures suggest that Bitcoin and the broader cryptocurrency market must fall further
The total crypto market value has fluctuated in a 17% range in the zone $ 840 billion to $ 980 billion in the last 28 days. The price movement is relatively tight considering the extreme uncertainty surrounding the recent market sales catalysts and the controversy surrounding Three Arrows Capital.
From 4 to 11 July, Bitcoin (BTC) increased a modest 1.8% while the price of Ether (ETH) remained flat. More importantly, the total crypto market is down 50% in just three months, which means that traders offer higher odds of the declining triangle formation breaking below $ 840 billion in support.
#Bitcoin Bottom scenario:
Since #BTC downtrend from the top $ BTC has the same descending triangle pattern each time, but each triangle becomes smaller
We can see another collapse from the triangle and 400WMA could be the bottom #Crypto #cryptovalutaer #cryptovaluta pic.twitter.com/oAQ0IX5XgU
– Aditya Siddhartha Roy❁ (@Adityaroypspk) July 7, 2022
Regulatory uncertainty continues to weigh on investor sentiment following a report by the European Central Bank (ECB) concluding that a lack of regulatory oversight contributed to the recent decline in algorithmically stable coins. As a result, the ECB recommended prudential and regulatory measures to limit the potential effect of stable currencies in European countries’ financial systems.
On July 5, Jon Cunliffe, Deputy Governor of Financial Stability at the Bank of England (BoE), recommended a set of regulations to address the ecosystem risk of cryptocurrencies. Cunliffe called for a regulatory framework similar to traditional finance to protect investors from irreparable losses.
A few mid-cap altcoins increased and sentiment improved slightly
The bearish sentiment from the end of June disappeared according to the Fear and Greed Index, a data-driven sentiment gauge. The indicator reached a record low of 6/100 on 19 June, but improved to 22/100 on 11 July when investors began to build confidence in a bottom in the market cycle.
Below are the winners and losers from the last seven days. Note that a handful of medium-sized altcoins rose 13% or higher even though the total market value increased by 2%.
Aave (AAVE) received 20% when the lending protocol announced plans to launch an algorithmic stack coin, a proposal that is subject to the community’s decentralized autonomous organization.
Chiliz (CHZ) increased 6% after the Socios.com app announced community-related features to increase user engagement and integration with third-party approved developers.
Asia-based flows and derivatives demand are neutral and balanced
The OKX Tether (USDT) premium measures the difference between China-based peer-to-peer trading and the official US dollar currency. Excessive demand for cryptocurrency pushes the indicator above the fair value of 100%. On the other hand, bearish markets are likely to flood the Tether (USDT) market offerings, causing a discount of 4% or higher.
Tether has been trading at a discount of 1% or higher in Asian peer-to-peer markets since July 4. The indicator failed to show a sentiment improvement on July 8, when the total crypto market value flirted with 980 billion dollars, the highest level in 24 days.
To confirm whether the lack of voltage is limited to the stablecoin flow, one should analyze futures markets. Perpetual contracts, also known as inverse swaps, have a built-in rate that is usually charged every eight hours. Stock exchanges use this fee to avoid imbalances in currency risk.
A positive financing rate indicates that longs (buyers) require more influence. However, the opposite situation arises when shorts (sellers) require extra influence, which causes the financing rate to be negative.
Related: Analysts say that “consolidation” of the Bitcoin site is most likely until a “macro catalyst” appears
Perpetual contracts reflected a neutral sentiment as Bitcoin, Ethereum and Ripple (XRP) showed mixed financing rates. Some exchanges presented a slightly negative (bearish) financing rate, but it is far from punishable. The only exception was Polkadot’s (DOT) negative 0.35% weekly rate (equal to 1.5% per month), but this is not particularly worrying for most traders.
Considering the lack of buying desire from Asian-based retail markets and the absence of leveraged futures demand, traders may conclude that the market is not comfortable betting that the total market value support level of $ 840 billion will hold.
The views and opinions expressed here are solely those of author and does not necessarily reflect the views of the Cointelegraph. Every investment and trade involves risk. You should do your own research when making a decision.
