Bitcoin in Week 9 of Crypto Winter, but Can’t Shake the Chills: Report

Crypto winter is entering its ninth week and bitcoin can’t shake the cold.

From specs to sales, market indicators are flashing red or amber for the largest cryptocurrency, which has lost a third of its value in just two months.

So what now?

Bitcoin’s limited history is not a good guide to crypto winters, which we define as prolonged bear markets for a month or more.

There have been five since 2017 and three since 2021. Last year’s two crashes lasted 14 and 10 weeks and caused Bitcoin to lose 45 to 47 percent. If they were typical, Bitcoin’s recent drop — a 36 percent loss in eight weeks — still has a long way to go.

“Bitcoin just isn’t attractive to retail investors right now. Nobody really sees the potential for Bitcoin to spend 10 times (return),” said Joseph Edwards, head of financial strategy at fund management company Solrise Finance.

Indeed, the macro backdrop is far from favorable for an asset class now firmly perceived as volatile, risky and vulnerable to inflation. As worries about rising global interest rates and geopolitics bring US stocks close to confirming a bear market, cryptocurrencies are not on anyone’s shopping list.

But even in the frigid wilderness, there are some signs that the crypto king is plotting his comeback.

Bitcoin is drawing strength from the rest of the crypto market, for example its relative size offers some solace to investors fleeing altcoins like stablecoins, considered extremely risky following the collapse of TerraUSD in early May.

Bitcoin’s dominance, a measure of the ratio of its market cap to the rest of the cryptocurrency markets, has surged to a seven-month high of over 44 percent even as its price has fallen.

“Institutional investors in particular are, to some degree, taking refuge in Bitcoin, which has the most institutional acceptance,” said Marcus Sotiriou, an analyst at British wealth brokerage GlobalBlock.

Last week, bitcoin futures recorded their largest net long position since the contract’s inception in 2018, CFTC data showed, suggesting traders are increasing their position for a surge in the cryptocurrency’s price.

fear and greed

Scary times though.

Bitcoin has lost half of its value since peaking at $69,000 (about Rs. 52,000) on Nov. 10. It is flirting with $30,000 this week after hitting a 17-month low of $25,401 (about 19.7 lakh) on May 12. It remains the largest digital asset by market cap, but the market value of all cryptocurrencies is now $1.3 trillion (approximately Rs.

Data platform Coinglass’ Bitcoin Fear & Greed Index of Market Sentiment – ​​with 0 indicating extreme fear and 100 indicating extreme greed – is hovering at 13.

Ether, the No. 2 token by market value, has settled near $2,000 (about 1.5 lakh) and is up about 60 percent from a peak of $4,868 (about 3.7 lakh) on Nov. 10 to like.

Bilal Hafeez, CEO of research firm Macro Hive, pointed to $2,300 (about 1.7 lakh) and $2,500 (about 1.9 lakh) as key levels and warned that trading above any of them in the near future would be a failure Marks to hold bearish signal.

The crypto market is intimidated.

Total spot market volume for all cryptocurrencies across major exchanges had fallen to US$18.4 billion (about Rs.1,42,790) on Monday – less than half of the US$48.2 billion (about Rs.3,74,050). crore) recorded on May 14 was the highest volume for 2022, according to news and research site The Block.

Blockchain analytics firm Glassnode said on May 9 that at $33,600 (about 26 lakh), Bitcoin is putting 40 percent of investors in their holdings under water.

“A lot of people are wondering what to do with their coins – to get on with their lives or take a loss and move on?” said Lindsey Bell, Chief Markets and Money Strategist at Ally Invest.

“It’s a good reminder that crypto probably shouldn’t make up more than, say, 1-2 percent of your portfolio.”

© Thomson Reuters 2022

Cryptocurrency is an unregulated digital currency, not legal tender and is subject to market risks. The information provided in this article is not intended to and does not constitute financial advice, trading advice, or any other advice or recommendation of any kind offered or endorsed by NDTV. NDTV is not responsible for any loss arising from any investment made on an accepted recommendation, forecast or other information contained in this article. Bitcoin in Week 9 of Crypto Winter, but Can’t Shake the Chills: Report

Ryan Sederquist

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