Cautious bullishness in Bitcoin and Crypto amid warnings of further downsides
The crypto market saw modestly higher prices on Monday, despite warnings from analysts and institutional investors that the market may fall further as infection from recent insolvencies continues to spread.
From Monday at 16:17 UTC, bitcoin (BTC) traded at USD 19,819, up 4% in the last 24 hours, but down 7% in the last 7 days. Meanwhile, ethereum (ETH) stood at $ 1,115, up almost 6% for the day and down 9% for the week.
The rise in crypto prices came while the crypto research and investment company Coin shares reported an increase in capital flows for the new short bitcoin exchange-traded fund (ETF) known as BITI.
In total, short-term bitcoin fund inflows of $ 51.4 million last week, indicating increasing bearishness towards the number one cryptocurrency among investors who prefer these more traditional investment instruments.
The short bitcoin feeds accounted for the vast majority of the total crypto fund feeds for the week, with only $ 4.9 million flowing into ETH-supported funds and $ 4.4 million to crypto-multi-asset funds.
Compared to the previous week, last week’s inflows mark an improvement from record highs of $ 423 million – although most of last week’s inflows went into the new short bitcoin ETF.
“Convinced” of several disadvantages
Commenting on the state of the crypto market on Sunday, the Singapore-based crypto trading firm QCP Capital said its “positive outlook is waning,” while adding that they are “convinced” that any upside in the short term will be limited.
According to the company, the main reason for these bearish prospects is previous comments from US Federal Reserve (Fed) Governor John Williams on the need to “get real interest rates above zero” and the fact that quantitative easing (QT) started in the US on June 15 and is set to increase further going forward.
In addition, the trading firm also said that the credit crunch among firms in the crypto area “is not over”, warning that “there may still be some liquidations on the horizon.”
It is worth noting that the comment QCP Capital points out whether real interest rates can mean something else in reality.
“Even if there is a certain tightening of financing terms and nominal interest rates, real interest rates will go from very, very deeply negative, to nothing or almost nothing,” said Dutch Central Bank President Klaas Knot during a discussion on World Economic Forum in May this year.
Bullish 4th of July
Meanwhile, the analysis company on the chain Santiment said that today – the 4th of July holiday in the US – has so far been marked by “a massive increase in longs on stock exchanges”.
Analysts nevertheless warned that overly eager bulls are often a contradictory signal, saying that liquidations of mortgaged long positions could follow.
Martin Hiesboeck, head of blockchain and Crypto Research at the payment provider, was also bullish maintainwho said in an email commentary on Monday that BTC “may be nearing a bottom.”
“It wavered aimlessly and with little volume around [USD 19,000] mark this week, and while some indicators point to a level around [USD 12,000 – USD 15,000] As the end of the bear phase approaches, a quick capitulation could be followed by either an extended or a spectacular return, Hiesboeck said.
An expanded bear market
Tom Loverro, a general partner in the venture capital firm, commented last week IVP and former board observer for Coin base, so he expects an expanded bear market for crypto.
“2023 will be mostly flat until downwards, until indifference sets in, signaling a long-awaited spring meltdown,” he said, adding that he expects macro conditions to improve in the second half of 2023.
“The bottom will not come during this current phase of fear and disgust, but later, after the indifference sets in, it will no longer create crypto headlines, and the tourists have left. That process will take many months,” he said.
Cathie Woods’ investment company also offers a rather pessimistic view Ark Invest said in a monthly bitcoin-focused report from Friday that contagion from trouble at companies like Celsius (CEL) and Three Arrows Capital has sent bitcoin to “capitulation”.
But even though the coin has already entered the capitulation phase, there may still be a further downside going forward, the company warned, citing high levels of unrealized losses and uncertain macro conditions as a risk to the price.
On the positive side, Ark’s report said that bitcoin is now traded under different targets for the cost basis of the chain for the first time in two years.
“Trading below these levels is atypical and suggests extremely oversold conditions. Only four times in history has bitcoin traded below price levels relative to these funds,” the report said.
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Learn more:
– Several Crypto Meltdowns can be seen this summer, but the worst is behind us – Panteras Morehead
– Do Not Fear the Reaper: Why the Market Downtrend Is Good for Crypto
– Bitcoin Lifeboat, Long Recovery Road and Excessive BTC Deaths: Saylor, CZ, and Professor Weigh In
– The Bitcoin Stock-to-Flow model and its followers are on fire again when errors are revealed
– ‘The Reckoning’ and ‘The Best Time’ to enter Bitcoin mining when companies diversify in the middle of the bear market
– The US Fed is to blame for the downturn, major cryptocurrencies are responsible for the ecosystem – FTX CEO
