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Bitcoin today: the great reset

The sell-off on the bitcoin market continues. At the time of writing, Bitcoin (BTC) is trading at $ 20,908, just above its 2017 bull market all time high.

If BTC falls below this dividing line, it would be a dam break. After all, the cryptocurrency never closed below an all-time high set in the previous bull market. The reason for the sale is, among other things, the liquidity bottleneck Centigrade and the associated wave of panic sales.

But you don’t want to paint the devil on the wall, because in view of the data on the chain, BTC is entering the territory of outright buying here. In fact, digital gold is more oversold these days than at any point in its history.

At 149,000, the entity-adjusted dormancy flow is lower than ever. The indicator shows “in layman’s terms […] the relationship between market capitalization and spending behavior on the chain, “market analyst Jan Wüstenfeld told BTC-ECHO.

Entity-adjusted dormancy flow has repeatedly proved to be a reliable underlying indicator in the past.

The correlation with the stock market decreases

In the past, cryptocurrency market sales had always been attributed to its correlation with the stock market. This guiding principle applies less and less. Because according to the data of Coinmetry correlation with the S&P 500, probably the most important stock market index in the world, decreases.

At the time of writing, the correlation is only 0.49. This is a significant drop from the annual high of 0.8 in May of this year. In other words: the performance of the two asset classes is increasingly decoupled.

Bitcoin RSI at an all-time low

The Relative Strength Index (RSI) also draws clear signals.

Bitcoin RSI. Deep like never before. Source: Plan C.

The index is a so-called momentum indicator. It therefore shows the current market dynamics by relating the recent price trend with the medium-term trend. An RSI below 45 is considered oversold: we are currently measuring an RSI of 40. This means that the index even dips below ground values ​​from Bitcoin’s past.

Despite all the underlying technical signals, there is one fundamental difference from past Bitcoin cycles: the macroeconomic environment. Because while for the past decade BTC has been trading in the longest bull market in recent history, the asset is struggling with a very different economic situation these days.

The ECB, for example, recently announced a key rate hike of up to 0.5 percentage points to curb inflation. The Fed is also expected to raise interest rates again on Wednesday. This could lead to further market turmoil in the short and medium term and put cryptocurrency markets under pressure.

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