The cryptozyme is in its ninth week, and Bitcoin still can’t shake the freezing cold. Market indicators are flashing yellow and red for the largest cryptocurrency by market capitalization, which lost a third of its value in just two months, writes Trud bg.
So what’s next? So far there have been five such winters since 2017 and three since 2021.
Last year’s two crashes lasted 14 and 10 weeks respectively, wiping 45% and 47% off the price of Bitcoin, respectively. If these can be taken for granted, then the token’s latest drop in price – down 36% in eight weeks – has a long way to go.
“Bitcoin is simply not attractive to retail investors right now. Nobody really sees this potential for bitcoin to deliver 10x“ returns, says Joseph Edwards, head of financial strategies at Solrise Finance.
Indeed, the macro environment is far from supportive for an asset class widely perceived as volatile, risky and vulnerable in the face of inflation. And while worries about rising interest rates around the world and geopolitics are driving US stocks ever closer to bearish territory, cryptocurrencies aren’t on anyone’s shopping list.
Yet even in the frigid wasteland, there are signs that the crypto king is making a comeback.
Bitcoin has been drawing strength from the rest of the crypto market – for example, its image has provided some reassurance to investors who are abandoning altcoins, including stablecoins, deemed too risky after the collapse of TerraUSD in early May.
Bitcoin’s leverage, a measure of the ratio of its market cap to the rest of the crypto market, hit a 7-month high of more than 44%, even as its price declines.
Last week, bitcoin futures recorded their largest net long position since the contract was offered in 2018, CFTC data showed. This is a signal that traders are preparing for a rise in the price of the cryptocurrency.
Bitcoin has lost half its value since its November 10 peak of $69,000. This week, its price is approaching the $30,000 mark after hitting a 17-month low of $25,401 on May 12. The coin remains the largest by market capitalization, but the market value of all cryptocurrencies is now $1.3 trillion — less than half of November’s $3 trillion.
The Coinglass market sentiment platform’s Fear & Greed index – where 0 is extreme fear and 100 is extreme greed – is at around 13.
Ether, the No. 2 cryptocurrency by market capitalization, is hovering around $2,000, down about 60% from its peak of $4,868 on Nov. 10.
Bilal Hafez, CEO of research firm Macro Hive, pointed to $2,300 and $2,500 as key levels, warning that an inability for the price to hold above either level in the short term would be a bearish signal.
The market is scared. The total spot market volume for all cryptocurrencies on the leading exchanges fell to $18.4 billion as of Monday (May 23), less than half of the $48.2 billion seen on May 14. It’s also the largest volume for 2022, according to data from research and news site The Block.
Glassnode indicated on May 9 that a bitcoin at a price of $33,600 would leave 40% of investors „underwater“ – when the asset is cheaper than when it was purchased.