Bitcoin is bullish on long term, bearish on short

Amount of Bitcoins held for over a year has increased by 54,300 on average in the last four weeks.

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People invest money in hopes of growing it. The assets they choose to invest generally depends on their current financial status, risk appetite, investing time horizon after taking macroeconomic factors into consideration. Most people are risk-on in nature because of a simple reason. Risk-on assets like stocks and crypto generate higher returns in a shorter span. Aside from hardcore arguments in favor of Bitcoin (BTC) as asset of the decade, BTC has had a lacklustre year thus far. In fact, BTC has declined by more than 50% from $47,700 to currently trade just above $20,000. 

In today’s article, we will briefly analyze the factors affecting crypto and an overview of price actions of major crypto assets. 

A look at macroeconomics

Crypto asset exchanges have seen net outflows for three straight months as investors pulled their tokens into cold wallets rather than selling, according to Arcane Research. Moreover, the amount of bitcoin held for over a year has increased by 54,300 on average in the last four weeks, the largest rise in about four months, according to Chainalysis. 

That leaves only institutional investors who seem to have caused this more recent slump in the crypto markets. This is not to say that retail has not sold but to emphasize that large investors might have sold significantly. Part of the reason is because institutional investors act in accordance with global economic cues, as their investing strategies are majorly tied with macroeconomic policies across the world, especially the US. This interrelatedness is evident (note comparison in image shown below) from close correlation between Nasdaq and Crypto markets. 

<source: Tradingview, Cryptocap> 

So far, globally, central banks have taken a hawkish stance as inflation has hit highest in the past couple of decades. One of the measures to mitigate inflation is through raising interest rates and that is what the US Federal Reserve has been looking at for the present. Additionally, the energy crisis is parallely unfolding in Europe disrupted by the Russia-Ukraine war. It is somewhat safe to say that the macro is not looking great for the near future and extreme caution is advised for folks who are looking to swing trade in this volatile market. 

Overview of BTC and Altcoins

Last week, global crypto market capitalization fell below $1 trillion to currently stand at $996 billion with a 4% increase in the last 24 hours. After two straight weeks of losses, BTC has crawled its way back above $20,000 for now. The short-term support has formed at $19,600 and next major resistance appears at $21,900 and subsequently at $25,200. BTC is trading near $20,400, up by 3%.

Ethereum (ETH), second-largest crypto asset by market cap, took support from the bulls at $1,424 to surge by 9% over the previous day to trade at $1,585. All debates about whether the price of ETH has been priced in or not, will be answered by mid-September when Merge upgrade finally occurs. Until then, ETH’s price will be subject to a lot of volatility. 

Among the top 20 crypto assets, most of them have registered gains between 3-8% in the last 24 hours except for Avalanche (AVAX) that increased by 12%. Ava labs, which is behind AVAX, was accused of paying lawyers to hurt competitors and to keep regulators at bay. Post the news breakout, AVAX dropped to a local low (since July 2022) of $17.48 before gaining some momentum to the upside.

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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.

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