Bitcoin is
trading near $33.5K on Monday morning, declining for the fifth consecutive day.
Over the past 24 hours, losses are 2.3%, and are approaching 14% over the past
seven days. Ether loses 3.5% in 24 hours and 14.3% for the week, settling near
$2450. Altcoins from the top ten are down between 0.8% (XRP) and 4.3%
(Cardano).
Total crypto
market capitalisation, according to CoinMarketCap, is down 2.3% overnight to
$1.54 trillion. More worryingly, volumes are rising along with falling prices.
This situation points to an increasingly rapid exit from cryptocurrencies, even
though the process takes place without sharp dips. We see an orderly exit – a
sure sign that downward sentiment may prevail.
The optimists,
however, have something to hang on to. The Cryptocurrency Fear and Greed Index
has collapsed to 11. Over the past year, the index has been at the current or
lower level six times, and on each occasion, we have seen either consolidation
or the start of a rally and a rebound.
In March
2020, when the index similarly reached single digits, we saw an influx of
long-term buyers.
The current
extreme fear may attract buyers who have been waiting for extreme oversold
conditions to buy cryptocurrencies long term.
However, we
note that the amplitude of crypto market fluctuations does not resemble either
a capitulation of enthusiasts or a wave of stop orders triggering. Typically, a
trend reversal is preceded by a sharp increase in momentum with the eventual
resignation of those who stood against the trend.
In our case
with Bitcoin, this could translate into a sharp acceleration of the sell-off
after falling below $30K, all the way to the $23K or even the $20K area. It is
only from this level that major long-term buyers can be expected to emerge.
This article was written by FxPro’s Senior Market Analyst Alex
Kuptsikevich.
