Crypto falls ahead of US inflation figures as Bitcoin On-Chain Metrics Signal “Oversold Conditions”
The crypto market fell on Tuesday ahead of a US inflation report for June which is feared to show that consumer prices have continued to rise at a faster pace despite interest rate increases. Meanwhile, several chain signs indicate that a bottom for bitcoin (BTC) may be about to form.
As of Tuesday at 11:20 UTC, bitcoin stood at $ 19,672, down 4% for the day and 3% for the week, after falling below the key level of $ 20,000 in early European trading. At the same time, ethereum (ETH) was trading at USD 1,065, down 7% for the day and 8% for the week.
The movements took place before the release of inflation figures for June in the US on Wednesday, with expectations that inflation will have increased further from 8.6% annually in May.
Fears that inflation will rise higher on Monday, then White Houses spokesperson Karine Jean-Pierre so she expects inflation to be “high high”. According to a Bloomberg estimate, the overall inflation rate for June is expected to reach 8.8% annually.
“Bitcoin remains in a tight trading area,” which has “let traders scratch their heads when the next meaningful move to the upside or downside will be in the biggest cryptocurrency,” Nick Heale, Head of Corporate Advisory at the cryptocurrency broker GlobalBlockwrote in an email comment Tuesday.
Heale further said that the week will be “crucial” for all financial markets with inflation figures coming out on Wednesday. “The Bulls will hope for some relief in the move, due to evidence that commodity prices may finally come down,” Heale said, warning that “this may take some time to play out.”
The card bitcoin entrance is falling
Meanwhile, new data from the crypto research and investment company Coin shares showed that flows of short-bitcoin investment products fell last week compared to the week before.
According to the latest data, the short-bitcoin entry was USD 6.3 million last week, a significant decrease from USD 51.4 million a week earlier, when the first short-bitcoin exchange traded fund (ETF) was just launched in the US . In both cases, BTC saw smaller outflows totaling $ 1.7 million.
Looking at total investment flows, the data showed that $ 14.6 million went into cryptocurrency-backed investment products last week, with ETH-backed funds as the most popular option.
Mt. Gox still poses a risk
Writing in a market Update Tuesday, the Singapore-based crypto-trading company QCP Capital said that cryptocurrency prices have remained limited to the upside “as expected.” They explained that an additional reason they see for limited upside going forward is news of a planned payment of BTC from the collapsed crypto exchange Mt. Gox.
“It is impossible to be sure of the exact effect, given the many cross-arguments and theories surrounding the release. Our main takeaway is that there is a high chance that BTC supply will flood the market soon,” the company wrote.
It added that “further sales pressure on BTC and perhaps the over-profit of ETH and [altcoins] against BTC ”may be possible as a result of Mt. The Gox situation.
“Widespread capitulation” may have occurred
Looking at the bitcoin market from a chain perspective, the cryptocurrency analysis firm Glassnode wrote in its latest report from Monday that many signals indicate that “a widespread capitulation has taken place”.
Among these signs was a chart titled Long-Term Holder (LTH) Capitulation Tracking, which shows intervals (in green) where long-term holders are under water on their coins, and losses are locked in based on their consumption. “In combination, this indicates that there is an increased probability that an LTH capitulation is underway,” Glassnode said.
In addition, the company pointed to “miner capitulation” as another sign that the current price is similar to large reductions earlier in BTC’s history.
Using a model that combined the so-called Puell multiple, a measure of total mining income in USD, and the degree of difficulty for Bitcoin mining, the report said that even though mining capitulation is underway, the process may take a few more months to play out. .
“[…] the next quarter is likely to continue to be at risk of further distribution [from miners] unless coin prices recover meaningfully, the report says.
Dylan LeClair, a senior analyst at the Bitcoin-focused investment company, was also skeptical about the future of bitcoin in the near to medium term. UTXO administration.
LeClair wrote on Twitter, suggesting that bitcoin could fall more, noting that the rally has been marked by “mostly closed shorts and scalp lengths.” “Bulls are waiting for them lower,” he added, referring to bitcoin in the market.
Finally, crypto exchange Kraken in its chain summary for July summarized that the crypto area continues to experience headwinds due to the still unresolved situation around large crypto companies that Celsius (CEL), BlockFiand Voyager.
It added that many chain indicators for BTC have continued to signal “oversold conditions while BTC is struggling to break back into neutral territory.” Should these indoctrons move back to neutral territory, “it could indicate that network demand is returning,” Kraken wrote.
“We continue to expect choppy price movements this month, but volatility will most likely increase until [Federal Open Market Committee, a committee within the US Federal Reserve System,] meeting towards the end of the month. Stronger bids around [USD 17,000] level, if bitcoin falls there again, will be a strong signal for the bulls and may indicate the formation of a potential bottom around that price, “Joe DiPasquale, CEO of cryptocurrency fund manager BitBull Capitalsaid in an email comment today.
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Learn more:
– The majority expects that Bitcoin will reach USD 10,000 before moving higher – Survey
– The coming recession will hit crypto, but not as hard as you think
– 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
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(Updated at 13:02 UTC with a comment from Joe DiPasquale.)
