Bitcoin
Bitcoin Price Drop Likely a ‘Bear Trap’, Says Crypto Expert By Investing.com
The price of continued its decline on Thursday as selling pressure from Bitcoin mining operators, Mt. Gox refunds and actions by the German state of Saxony continued. However, a crypto expert told Investing.com that the ongoing downtrend could be “a bear trap.”
Why is Bitcoin price in a downtrend?
The now-defunct Mt. Gox exchange remains a key issue for the world’s largest cryptocurrency, with the exchange’s curators recently beginning to refund tokens to customers affected by a 2014 hack. The exact amount of that distribution is unclear, but wallets linked to the exchange moved around $9 billion worth of tokens earlier this year.
Additionally, the German government is disposing of Bitcoins confiscated from a piracy website, potentially containing at least $2 billion worth of tokens.
The sharp drop in Bitcoin’s price has raised concerns that major Bitcoin miners may start selling off some of their assets to break even, especially after the Bitcoin halving earlier this year reduced miner rewards.
These factors have weighed significantly on BTC in the recent period, shaving around 15% off its value in the past month.
Cryptocurrency expert weighs in
Bitcoin is currently trading above the $58,000 mark, having bounced off last week’s low of $53,600. The cryptocurrency remains in a technical downtrend from March’s record high of $73,800, with consecutive lower highs at $71,300 and $63,900.
Eugene Cheung, head of institutions at Bybit, said that while optimism remains for the medium-term outlook, the cryptocurrency market is not immune to abrupt macro events that can significantly affect global market sentiments. However, Cheung notes that the $57,000 support level has so far helped sustain Bitcoin’s price, pointing to the market’s resilience and limiting further declines.
“If the price can quickly rise above the 200-day moving average, this recent decline could be considered a bear trap, and a higher rally could be expected,” Cheung told Investing.com.
Historically, market corrections have acted as healthy resets within ongoing bull markets, aligning with well-established trends. Cheung notes that there was a decline in trading activity and cryptocurrency prices on centralized exchanges for nearly two months following the halving event in previous Bitcoin cycles, a pattern that has repeated itself in the current cycle.
“Market cycles can last 12 to 18 months after the Bitcoin halving before producing a new cycle top,” he said. “Despite common fears that ‘this time is different,’ the cyclical nature of markets often sees history not repeating itself, but certainly rhyming.”
Meanwhile, recent data from on-chain data and market analytics firm CryptoQuant offers a different perspective, suggesting that a major Bitcoin price correction or the start of a sustained bear market could be imminent as the P/L ratio hovers around its 365-day moving average. Previous crossovers to the downside preceded significant declines in May and November 2021.
CryptoQuant’s Bitcoin bull and bear market cycle indicator is also approaching a critical level that indicates a possible decline into a bear market.
Bitcoin
Bitcoin (BTC), Stocks Bleed as China’s Surprise Rate Cut Signals Panic, Treasury Yield Curve Steepens
Risk assets fell on Thursday as China’s second rate cut in a week raised concerns of instability in the world’s second-largest economy.
Bitcoin (BTC)the leading cryptocurrency by market cap, is down nearly 2% since midnight UTC to around $64,000 and ether (ETH) fell more than 5%, dragging the broader altcoin market lower. The CoinDesk 20 Index (CD20), a measure of the broader cryptocurrency market, lost 4.6% in 24 hours.
In equity markets, Germany’s DAX, France’s CAC and the euro zone’s Euro Stoxx 50 all fell more than 1.5%, and futures linked to the tech-heavy Nasdaq 100 were down slightly after the index’s 3% drop on Wednesday, according to the data source. Investing.com.
On Thursday morning, the People’s Bank of China (PBoC) announced a surprise, cut outside the schedule in its one-year medium-term lending rate to 2.3% from 2.5%, injecting 200 billion yuan ($27.5 billion) of liquidity into the market. That is the biggest reduction since 2020.
The movement, together with similar reductions in other lending rates earlier this week shows the urgency among policymakers to sustain growth after their recent third plenary offered little hope of a boost. Data released earlier this month showed China’s economy expanded 4.7% in the second quarter at an annualized pace, much weaker than the 5.1% estimated and slower than the 5.3% in the first quarter.
“Equity futures are flat after yesterday’s bloody session that shook sentiment across asset classes,” Ilan Solot, senior global strategist at Marex Solutions, said in a note shared with CoinDesk. “The PBoC’s decision to cut rates in a surprise move has only added to the sense of panic.” Marex Solutions, a division of global financial platform Marex, specializes in creating and distributing custom derivatives products and issuing structured products tied to cryptocurrencies.
Solot noted the continued “steepening of the US Treasury yield curve” as a threat to risk assets including cryptocurrencies, echoing CoinDesk Reports since the beginning of this month.
The yield curve steepens when the difference between longer-duration and shorter-duration bond yields widens. This month, the spread between 10-year and two-year Treasury yields widened by 20 basis points to -0.12 basis points (bps), mainly due to stickier 10-year yields.
“For me, the biggest concern is the shape of the US yield curve, which continues to steepen. The 2- and 10-year curve is not only -12 bps inverted, compared to -50 bps last month. The recent moves have been led by the rise in back-end [10y] yields and lower-than-expected decline in yields,” Solot said.
That’s a sign that markets expect the Fed to cut rates but see tighter inflation and expansionary fiscal policy as growing risks, Solot said.
Bitcoin
How systematic approaches reduce investor risk
Low liquidity, regulatory uncertainty and speculative behavior contribute to inefficiency in crypto markets. But systematic approaches, including momentum indices, can reduce risks for investors, says Gregory Mall, head of investment solutions at AMINA Bank.
Low liquidity, regulatory uncertainty and speculative behavior contribute to inefficiency in crypto markets. But systematic approaches, including momentum indices, can reduce risks for investors, says Gregory Mall, head of investment solutions at AMINA Bank.
Low liquidity, regulatory uncertainty and speculative behavior contribute to inefficiency in crypto markets. But systematic approaches, including momentum indices, can reduce risks for investors, says Gregory Mall, head of investment solutions at AMINA Bank.
July 24, 2024, 5:30 p.m.
Updated July 24, 2024, 5:35 p.m.
(Benjamin Cheng/Unsplash)
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Bitcoin
India to Release Crypto Policy Position by September After Consultations with Stakeholders: Report
“The policy position is how one consults with relevant stakeholders, so it’s to go out in public and say here’s a discussion paper, these are the issues and then stakeholders will give their views,” said Seth, who is the Secretary for Economic Affairs. “A cross-ministerial group is currently looking at a broader policy on cryptocurrencies. We hope to release the discussion paper before September.”
Bitcoin
Bitcoin (BTC), Ether (ETH) slide as risk aversion spreads to crypto markets
Ether, the second-largest token, fueled a slide in digital assets after a stock rout spread unease across global markets.
Ether fell about 6%, the most in three weeks, and was trading at $3,188 as of 6:45 a.m. Thursday in London. Market leader Bitcoin fell about 3% to $64,260.
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