Solana, NEAR and AVAX were all trading over 20% lower on Wednesday, as global crypto markets continued to fall on hump-day. The cryptocurrency market cap is currently down 6.35%, as traders continued to digest the recent crash in the price of LUNA and UST.
Solana was down by over 20% during Wednesday’s trading session, as the bear market caused by the crash in LUNA continued to send shock waves through the markets.
After trading at a peak of $70.90 on Tuesday, SOL/USD dropped to a low of $49.69 earlier in the day.
This drop in price is the biggest one day move this year, and has sent SOL to its lowest level since August last year.
Overall, prices have been on a downward trend since a failed breakout attempt of the $93 resistance point, which came the day before the Fed rate decision.
Looking at the chart, the 14-day RSI is reading off the charts, and is currently tracking at 24.87, which is the weakest level it has recorded in nearly five months.
Despite earlier losses easing, price was still down 24.30% from yesterday’s peak, with traders still looking to find a stable support point.
Aside from LUNA, which fell by over 90% in today’s session, AVAX was another notable mover, as it dropped by over 30% today.
The token fell to an intraday low of $27.85 on Wednesday, following a peak of $48.52 during yesterday’s session.
As a result of the move, AVAX/USD fell to its lowest level in nearly nine months, as prices almost dropped below $20.
Overall, AVAX has dropped by over $70 since the start of April, with today’s floor the lowest level prices have been since last August.
Looking at the chart, the 14-day RSI is now tracking below 23, which is the weakest level this indicator has hit since the inception of AVAX.
Bulls will use the fact that prices are so deeply oversold as a positive, however with no clear price floor, we may see more uncertainty to come in upcoming sessions.
Could we see AVAX break below $20 this week? Let us know your thoughts in the comments.
Eliman brings a eclectic point of view to market analysis, having worked as a brokerage director, retail trading educator, and market commentator in Crypto, Stocks and FX.
Image Credits: Shutterstock, Pixabay, Wiki Commons
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Low inflation or bust: Analysts say the Fed has no choice but to continue raising rates
As economic conditions continue to worsen, financial experts worldwide are increasingly placing the blame at the feet of the United States Federal Reserve after the central bank was slow to respond to rising inflation early on.
Financial markets are currently experiencing their worst stretch of losses in recent history, and it doesn’t appear that there is any relief in sight. May 24 saw the tech-heavy Nasdaq fall another 2%, while Snap, a popular social media company, shed 43.1% of its market cap in trading on May 23.
— Crypto Phoenix (@CryptoPheonix1) May 24, 2022
Much of the recent turmoil again comes back to the Fed, which has embarked on a mission to raise interest rates in an attempt to get inflation under control, financial markets be damned.
Here’s what several analysts are saying about how this process could play out and what it means for the price of Bitcoin (BTC) moving forward.
Will the Fed tighten until the markets break?
Unfortunately for investors looking for short-term relief, economist Alex Krüger thinks that “The Fed will not stop tightening unless markets break (far from that) or inflation drops considerably and for *many* months.”
One of the main issues affecting the psyche of traders is the fact that the Fed has yet to outline what inflation would need to look like for them to take their foot off the rate-hike gas pedal. Instead, it simply reiterates its goal “’to see clear and convincing evidence inflation is coming down’ towards its 2% target.”
According to Krüger, the Fed will “need to see Y/Y [year-over-year] inflation drop 0.25%–0.33% on average every month until September” to meet its goal of bringing down inflation to the 4.3%–3.7% range by the end of the year.
Should the Fed fail to meet its PCE inflation target by September, Krüger warned about the possibility that the Fed could initiate “more hikes *than what’s priced in*” and also begin exploring the sale of mortgage-backed securities as part of a quantitative tightening campaign.
“Then markets would start shifting to a new equilibrium and dump hard.”
A setup for double-digit sustained inflation
The Fed’s responsibility for the current market conditions was also touched on by billionaire investor and hedge fund manager Bill Ackman, who suggested that “The only way to stop today’s raging inflation is with aggressive monetary tightening or with a collapse in the economy.”
In Ackman’s opinion, the Fed’s slow response to inflation has significantly damaged its reputation, while its current policy and guidance “are setting us up for double-digit sustained inflation that can only be forestalled by a market collapse or a massive increase in rates.”
Due to these factors, demand for exposure to stocks has been muted in 2022 — a fact evidenced by the recent decline in stock prices, especially in the tech sector. For example, the tech-heavy Nasdaq index is now down 26% on the year.
With the cryptocurrency sector being highly tech-focused, it’s not surprising that weakness in the tech sector has translated to weakness in the crypto market, a trend that could persist until there is some form of resolution to high inflation.
How could Bitcoin fare going into 2023?
According to Krüger, the “base case scenario for upcoming price trajectory is a summer range that starts with a rally followed by a drop back to the lows.”
“For $BTC, that rally would take price to the start of the Luna dump (34k to 35.5k).”
Crypto trader and pseudonymous Twitter user Rekt Capital offered further insight into the price levels to keep an eye on for a good entry point moving forward, posting the following chart showing Bitcoin relative to its 200-day moving average.
Rekt Capital said:
“Historically, #BTC tends to bottom at or below the 200-MA (orange). The 200-MA thus tends to offer opportunities with outsized ROI for $BTC investors (green). […] Should BTC indeed reach the 200-MA support… It would be wise to pay attention .”
The overall cryptocurrency market capitalization now stands at $1.258 trillion, and Bitcoin’s dominance rate is 44.5%.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
ECB: One in ten households in eurozone population centers now own cryptocurrency
The survey took place in the EU’s major economic areas such as France, Germany, Italy, Spain, Belgium, and the Netherlands.
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On Tuesday, the European Central Bank, or ECB, published the results of a new survey conducted in six eurozone areas; the Netherlands, Spain, Italy, Belgium, France, and Germany. Together, approximately 10% of respondents from the surveyed countries said they own cryptocurrencies. Out of this group, only 6% of respondents said they own digital assets worth more than 30,000 euros. Meanwhile, 37% of respondents said they owned up to 999 euros in crypto.
Across all of the countries surveyed, investors in the fifth income quintile (or the wealthiest 20% of the population) consistently had the highest proportion of cryptocurrency ownership relative to other income groups. The Consumer Expectation Survey asked adults aged 18 to 70 if they or anyone in their household owned financial assets in various categories, such as crypto-assets.
The survey was included in a new report published by the ECB the same day regarding the growing adoption of crypto assets despite their risk factors. As cited by the ECB, 56% of respondents in a recent Fidelity survey said they had some exposure to crypto-assets, up from 45% in 2020. Increased availability of crypto-based derivatives and securities on regulated exchanges, such as futures, exchange-traded notes, exchange-traded funds, and OTC-traded trusts, have contributed to the momentum.
In addition, increased regulation has been taken as a sign that public authorities endorse crypto. As an example, the ECB cited Germany allowing institutional funds to invest up to 20% of their holdings in crypto. However, the ECB highlighted at the end of the report that if current trends in digital asset adoption continue, then they will eventually pose a threat to financial stability.
Weak stocks and declining DeFi use continue to weigh on Ethereum price
Ether’s (ETH) 12-hour closing price has been respecting a tight $1,910 to $2,150 range for twelve days, but oddly enough, these 13% oscillations have been enough to liquidate an aggregate of $495 million in futures contracts since May 13, according to data from Coinglass.
The worsening market conditions were also reflected in digital asset investment products. According to the latest edition of CoinShare’s weekly Digital Asset Fund Flows report, crypto funds and investment products saw a $141 million outflow during the week ending on May 20. In this instance, Bitcoin (BTC) was the investors’ focus after experiencing a $154 weekly net redemption.
Russian regulation and crumbling U.S. tech stocks escalate the situation
Regulatory uncertainty weighed on investor sentiment after an updated version of the Russian mining law proposal came to light on May 20. The document in the lower chamber of the Russian parliament no longer contained the obligation for a crypto mining operators registry nor the one-year tax amnesty. As cited by local media, the legal department of the Duma stated that these measures could “possibly incur costs on the federal budget.”
Additional pressure on Ether price came from the Nasdaq Composite Index’s 2.5% downturn on May 24. In addition, the heavily-tech stock-driven indicator was pressured after social media platform Snap (SNAP) tumbled 40%, citing rising inflation, supply chain constraints and labor disruptions. Consequently, Meta Platforms (FB) shares fell by 10%.
On-chain data and derivatives are in favor of bears
The number of active addresses on the largest Ethereum network’s decentralized applications (DApps) has dropped by 27% from the previous week.
To understand how professional traders, whales and market makers are positioned, let’s look at Ether’s futures market data.
Quarterly futures are used by whales and arbitrage desks due, primarily, to their lack of a fluctuating funding rate. These fixed-month contracts usually trade at a slight premium to spot markets, indicating that sellers request more money to withhold settlement longer.
These futures should trade at a 5% to 12% annualized premium in healthy markets. This situation is technically defined as “contango” and is not exclusive to crypto markets.
Ether’s futures contracts premium went below the 5% neutral-market threshold on April 6. There’s an evident lack of conviction from leverage buyers because the current 3% basis indicator remains depressed.
Ether might have gained 2% after testing the $1,910 channel resistance on May 24, but on-chain data shows a lack of user growth, while derivatives data point toward bearish sentiment.
Until there’s some morale improvement that boosts the use of decentralized applications and the Ether futures premium regains the 5% neutral level, the odds of the price breaking above the $2,150 resistance seems low.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
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