Why Crypto Could Heading For A Retest Of The Summer Lows
August 22 2022 - 02:46PM
NEWSBTC
The crypto market has seen over today’s trading session as large
cryptocurrencies retrace as much as 20% during the weekend. The
near term seems likely to trend to the downside, at least until the
end of the week, according to a group of experts. Related Reading:
Polkadot (DOT) Hits The Brakes At $7.34 After Brief Recovery At the
time of writing, the crypto total market broke below the $1
trillion mark and could re-test support at $920 billion. Macro
conditions seem to be pushing down risk assets, such as
cryptocurrencies and equities, In a market update shared with
NewsBTC, Matt Weller, Global Head of Research for FOREX.com, and
City Index, the current price action across the sector has been
triggered by a decrease in risk appetite from market participants.
There is still much uncertainty around macro-economic factors which
could be contributing to the latter. The U.S. Dollar (DXY Index)
has been pushing upwards, as the market seeks shelter from high
inflation and uncertainty, negatively impacting other major
currencies, equities, and crypto assets. If the U.S. dollar
continues its ascend, the total market cap for the nascent sector
could see a 58% decline by completing a bear flag formed on its
weekly chart. As analyst Caleb Franzen said, this could push the
sector to its 2020 levels at around $400 billion and take down a
large portion of the profits generated during the past bull run. If
you watched the livestream this morning, you saw me share this
potential bear flag for $TOTAL crypto market cap. It would imply a
-58% decline to $414Bn. Lines up with key structure. Difficult to
see, but worth monitoring as a potential scenario…
pic.twitter.com/nleiOsoJ8b — Caleb Franzen (@CalebFranzen) August
22, 2022 For Bitcoin, this could mean a return to the low $10,000s.
According to Weller, Bitcoin saw “durable damage” as its price was
pushed from a yearly high of around $48,000 into a yearly low of
$18,700. As the price bounced off those lows, BTC formed a rising
channel but was rejected of the 50-day Exponential Moving Average
(EMA) last week. As the chart below shows, the price of Bitcoin
broke below this channel “leaving a bearish near-term bias for a
potential retest of the summer lows near $18,700”. What A Crypto
Crash Could Do To The Price Of Large Digital Assets For the second
cryptocurrency by market Ethereum, an important benchmark for the
sector, Weller believes it has seen an “impressive rally”. The
cryptocurrency will complete its migration to a Proof-of-Stake
(PoS) consensus with “The Merge”, this has supported the bullish
momentum. Related Reading: Ethereum Slides To $1,500 As Hype Around
Merge Dies Down However, in the short term Ethereum is also trading
below its EMA which could push its price back to its “late July
swing low near $1,375”, the expert said. As seen below, if bulls
can push the price back to its last week’s levels, ETH might
re-test that support with the risk to drop to $1,275 and $1,000.
Weller added: After the dramatic blowups and deleveraging we saw in
May and June, an long-term V-shaped bottom this summer was always
unlikely. As we flip the calendar into September, the key question
for crypto traders may well be whether we go on to break this
summer’s lows or merely retest them to set the stage for the next
bull cycle.
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