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Big crash waiting for cryptocurrencies?

The digital currency market experienced a significant decline in the last 48 hours, losing 5% of its value. The total crypto market cap now stands at $3.19 trillion, a five-day low. At the same time as the overall decline of the cryptocurrency market, we are witnessing selling pressure on Bitcoin and other digital currencies.

In the current situation, investors do not have much confidence in the traditional financial markets, and this situation is due to the forecast of an increase in tariffs after the start of the government’s work. Donald Trumpcontinues. The fear and greed index of the digital currency market also fell to 75, which is its lowest level in the last two weeks.

Bitcoin performance analysis

According to CryptoQuant data, the profit and loss ratio (P/L) of Bitcoin has reached the peak price levels of this cryptocurrency in March 2024 (March 1402 and April 1403) with a price of $73,400, and this means that investors are accumulating profits at the peak of Bitcoin’s price. have done

Although Bitcoin is seen as a safe haven against geopolitical instabilities, the explanation Joe Biden Regarding the resolution of recent conflicts between several countries, the demand for this asset has decreased.

Analysis shows that long-term investors have moved $60 billion of Bitcoin supply over the past 30 days, and November is known as the peak profit-taking period in the current market cycle. This behavior is usually seen when the market has reached its ceiling and therefore the selling pressure has increased. Moreover, the bearish divergence between the price of Bitcoin and the Relative Strength Index (RSI) in the daily timeframe indicates overbought and has prevented this asset from crossing the $100,000 level.

Bitcoin futures market developments

The decline in the digital currency market has also spread to the Bitcoin futures market. Positions with very high leverage have intensified the volatility in this market. Nick Forsterthe founder of Derive noted that traders have turned to hedging strategies. This issue is evident in the 30% reduction of the Call-Put Skew index for the Bitcoin option due on December 27th (7th December 1403).

Despite the high volatility, Forster noted that Bitcoin’s seven-day and thirty-day implied volatility levels have remained stable at 63% and 55%, respectively. Analysts continue to monitor the futures market as a key factor in the short-term price movements of the crypto king.

The different reaction of altcoins to the fall of the crypto market

Altcoins have shown different reactions to the decline of the digital currency market. On the one hand, the price of The Sandbox (SAND) fell by 12.03%, while Stellar (XLM) and Discentral (MANA) fell by 10.07% and 8.24%, respectively. Other major altcoins such as Arbitrum (ARB), Maker (MKR) and Ethereum Classic (ETC) also lost more than 5% of their value.

Some altcoins grew despite the downtrend in the crypto market. Phantom (FTM) led the way with an increase of 13.86%, followed by SEI (SEI) and Injective (INJ) with growth of 13.55% and 13.05%, respectively.

ALGO also experienced a 10.59% growth, and other profitable alts in this period include SUI and THETA Network. Analysts say that when Bitcoin enters a stabilization phase, capital in the market is likely to be injected into selected altcoins.

Will the downward trend of digital currencies stop?

The decline in the crypto market has raised the question of whether the downward trend will stop or should we expect a continued fall? Michael van de Popethe founder of MN Trading, says that there are signs of the market heating up, including high volatility and increased margin positions. “It is very likely that Bitcoin will begin a long-term stabilization period, although some altcoins could continue to perform positively,” he stated.

Although the cryptocurrency market cannot be trusted in the short term, institutional investors such as MicroStrategy remain bullish on the market. Michael Silverthe company’s founder recently announced that he bought another 55,500 bitcoins at an average price of $97,862, bringing his company’s total holdings to 386,700 bitcoins. This demonstrates continued confidence in Bitcoin’s long-term potential, even in challenging market conditions.

Bitcoin price bounced back from the 24-hour low of $90,700 and is now trading at $93,300. On the other hand, the trading volume of this cryptocurrency has increased with extensive purchases of crypto whales.

Note: This article does not contain Zomit’s economic advice and is for informational purposes only.

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