Premature Bounce of Cryptocurrency?

Premature Bounce of Cryptocurrency?

The rebound seen in cryptocurrencies seems encouraging to some, but signs remain bearish at the beginning of the year.
The cryptocurrency market has replaced the traditional market since the beginning of the year with a significant rise in valuation and in particular the price of bitcoin. The latter is up nearly 25% year-to-date but still lost about 70% from its all-time high of $69,000. Despite this significant rise in the short term, the return of the bull market in the long term seems premature for several reasons. We are going to discuss various points that lead us to believe that the low point of this fourth bear market seen since the inception of Bitcoin has not yet been touched.
Psychology, chart analysis, as well as constant risks affecting market participants are some of the main factors. Psychologically, investors seem to be a little quick to rejoice in this bounce, certainly encouraging, but very minor given the already observed drop in the price of bitcoin and other cryptocurrencies. To put this growth into perspective, Bitcoin would still need to climb another 230% to reach its all-time high again.
As for the players in the market, Genesis filed for bankruptcy on January 19, which likely led to the decision of Gemini, which it owes almost a billion, and its creditors.
Additionally, investors will now be keeping an eye on the situation at Genesis parent company DCG, which also owns over 200 companies in the cryptocurrency sector. Indeed, the liquidity issues that emerged after the FTX crash and forced Genesis to suspend withdrawals over 2 months ago could put the parent company in a difficult position as well. The sale of DCG-owned crypto carrier Coindesk could be an opportunity to quickly find liquidity.
Finally, from a technical analysis point of view, the recent significant rebound is certainly attractive, but it does not yet confirm a return to the main uptrend. Indeed, the rise in price has broken through some important technical levels, but is still under control of the high just before the FTX-related market decline.
In addition, to confirm a healthy and sustainable bounce, Bitcoin, which usually leads the entire market trend, should watch the breath and come back to gain a foothold at the main psychological level, i.e. $19,700, $20,000. .
Indeed, this price is in line with the old all-time high seen during the previous bull market, and a confirmation of holding beyond would confirm the return of the long-term uptrend.
As of today, the various factors cited here lead us to believe that the bear market is not over yet. A final capitulation through a sharp, rapid drop in price would start accumulation for the long-term investor in the cryptocurrency market.

Read More…

Leave a Reply

Your email address will not be published.

four × 3 =