A Healthy & Necessary Correction in Crypto?
Market participants are adopting a cautious approach as speculation circulates that investors from the Satoshi era are liquidating their positions, with Bitcoin hovering just beneath its historical peaks.
Bitcoin was last trading around $119,600 in a recovery run-up over the weekend and Monday.
This comes after the leading crypto token by market capitalization experienced a decline of approximately 2%, settling at $116,200 on Friday, which is roughly 5.7% lower than its peak of over $123,000 hit on July 14.
The recent downturn in the cryptocurrency market can be viewed as a constructive and essential adjustment following its earlier peaks.
Nearly $400 million in long positions were liquidated, with Bitcoin at the forefront, accounting for $159 million, as reported by researcher Coinglass. That was in the 24 hours leading into Friday last week.
In July, the overall market capitalization of all cryptocurrencies in circulation momentarily exceeded $4 trillion, as reported by CoinGecko data.
Analysts say a drop to the $3.4 trillion level would still be interpreted as a strategic move to realize gains. Experts say that if the market stays above this threshold, discussing a shift in the medium-term trend becomes unnecessary.
Many analysts maintain an optimistic outlook for the long-term prospects of cryptocurrency. Analysts at Citigroup indicated in a recent note that they project Bitcoin may reach $135,000 by year-end.
The overall upward trend continues to hold, yet the momentum has slowed, leading to a more cautious approach among traders.
Experts anticipate additional consolidation as Bitcoin stays beneath the monthly trendline resistance, presently near $125,000, which limited Bitcoin’s progress last week.
No Turning Point Yet for Altcoins?
Smaller tokens experienced greater declines, as both XRP and Dogecoin dropped over 5% last week. The pullback tempered expectations that alternative digital currencies were set to surpass the market leader after its remarkable record-breaking performance.
For many seasoned crypto traders, altcoins' performance is a pattern that operates with remarkable consistency.
Initially, Bitcoin experiences a surge, generating renewed interest in digital assets.
Capital is increasingly directed towards the leading cryptocurrency, while enthusiasm for lesser-known “alternative” tokens diminishes. Market participants are starting to seek out more substantial opportunities in different avenues.
New stories emerge. This is followed by a shift towards underperformers, resulting in the superior returns that prompted traders to label the phenomenon as “altcoin season” during the bullish market of 2017-2018.
Following Bitcoin's consolidation in a tight trading range after achieving a new all-time high on July 14 during the excitement of “Crypto Week,” key figures in the digital asset space and market participants have been highlighting the recent surge of Ether and a potential recovery in the historically struggling NFT sector as a pivotal moment.
Nevertheless, this cycle has been marked more by intermittent fluctuations than a widespread surge in alternative cryptocurrencies.
XRP experienced a remarkable increase of over 60% since the beginning of July but faced a decline of 11% on Wednesday.
The newly launched Pump token from the top memecoin platform has experienced a decline in value following its impressive sale of $600 million worth of tokens in merely 12 minutes, approximately two weeks prior.
It is frequently stated that certain market participants assert that the current situation is unique.
There is a growing consensus around the emergence of a thriving corporate crypto treasury sector, which is quickly evolving from an emphasis on Bitcoin to a diverse array of tokens.
However, prior to diving headfirst into altcoins, it might be wise to pause and consider the well-known volatility associated with altcoins, memecoins, and NFTs.
A significant number of the widely recognized alternative cryptocurrencies fall into a classification referred to as “low float, high fully diluted valuation” tokens.
These tokens frequently exhibit a substantial fully diluted valuation, reaching into the billions. However, a detailed examination of their token distribution reveals that only a limited fraction is accessible for trading without restrictions.
This frequently renders these tokens more susceptible to market manipulation. Typically, these elements emerge during the concluding phases of an altcoin season, characterized by heightened speculation, market fatigue, and frequently, a shift in price trends.
What Technical Analyses Are Telling Us?
TradingView's overall BTCUSD technical analysis for the week ahead gives a 'buy' signal.
However, a deeper dive into technical indicators shows a 'sell' signal among the oscillators, while moving averages still point to a 'strong buy' stance.
Within the oscillators, four technical indicators, including Momentum (10), gave a 'sell' signal.
TradingView's Market Cap BTC Dominance percentage has fallen again over the past week.
In the cryptocurrency market, the dominance of a coin refers to the ratio of its market capitalization compared to the total market capitalization of all cryptocurrencies combined.
This approach effectively illustrates the scale of a particular coin in the entire cryptocurrency market, as the value of each asset is assessed in comparison to others.
TradingView's Market Cap BTC Dominance fell to 60.78%, down 0.009% last week and 7.54% over the past month.
Separately, InvestTech's Algorithmic Overall Analysis gives Bitcoin a positive score of 79, with a 'low' rating for liquidity risk and a 'medium' rating for volatility risk.
InvestTech recommends holding Bitcoin in the one- to six-week timeframe.
The short-term analysis from InvestTech shows that market participants have consistently increased their purchasing prices for Bitcoin, and the asset is currently positioned within an upward trend channel in the near term.
This reflects growing confidence among stakeholders and suggests an ongoing upward trend.
The price has experienced a significant increase following the favorable indication from the rectangle formation upon breaking through the resistance at $107,710. The target of $115,727 has been achieved, yet the pattern continues to indicate movement in the same direction.
The token is nearing a resistance level at $120,800, which could trigger a bearish response.
Nonetheless, a move above $120,800 will indicate a favorable trend. There is a poor correlation between volume peaks and troughs and the corresponding price highs and lows.
This situation diminishes the upward momentum and may serve as an initial indicator of an impending trend reversal.
The RSI curve indicates a declining trend, serving as an early indicator of a potential downward trend reversal for the price as well.
InvestTech says the OG token is currently evaluated as technically neutral for the near term.
Seasonal prediction from InvestTech shows a potential 30% rise for Bitcoin from here through to December this year.
On ETF flows, SoSoValue puts last week's Daily Total Net OI (Delta) at $346.36 million, indicating an increase in open contracts for calls.
That suggests that market makers need to buy more underlying assets to hedge their positions, which typically leads to the purchase of more ETFs.
Daily net inflows amounted to $130.69 million on Friday, marking a healthy ETF reading.
Overall, technical indicators point to some upside for the OG token this week, but with a risk of a pullback in a tight range.
Elsewhere
Blockcast
How Nook is Simplifying DeFi Lending & Making Crypto Accessible to the Masses
In this episode, we dive into the world of crypto payments with Joey Isaacson, CEO and co-founder of Nook . Joey Isaacson shares his journey from working at tech giants like Facebook and Uber to entering the crypto space through Coinbase. He discusses the challenges and opportunities in making crypto accessible to the masses, focusing on simplifying DeFi lending and the importance of user-friendly design.
Access the episode from your preferred podcast platform here .
Blockcast is hosted by Head of APAC at Ledger, Takatoshi Shibayama . Previous episodes of Blockcast can be found here , with guests like Kapil Duman (Quranium), Eric van Miltenburg (Ripple), Davide Menegaldo (Neon EVM), Jeremy Tan (Singapore parliament candidate), Alex Ryvkin (Rho), Hassan Ahmed (Coinbase), Sota Watanabe (Startale), Nic Young (Oh), Jacob Phillips (Lombard), Chris Yu (SignalPlus), Kathy Zhu (Mezo), Jess Zeng (Mantle), Samar Sen (Talos), Jason Choi (Tangent), Lasanka Perera (Independent Reserve), Mark Rydon (Aethir), Luca Prosperi (M^0), Charles Hoskinson (Cardano), and Yat Siu (Animoca Brands) on our recent shows.
Blockhead is a media partner of Coinfest Asia 2025. Get 20% off tickets using the code M20BLOCKHEAD at https://coinfest.asia/tickets .
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