Crypto Market Indicators Suggest Near-Term Consolidation

Cryptocurrency market indicators, such as the average Bitcoin funding rate, inflows of crypto investment products and the ratio of sales of old and new coins, show the near-term integration of the sector and the rise of Bitcoin towards the end of the year. year. I assume the chances are slim.

Bitcoin rose 1.6 percent to $57,850.56 on Friday but is on track for a weekly loss of more than 11 percent, its worst week since May. This is 16% below the record high of $69,000 on November 10. Ether, the second largest cryptocurrency by market value, is 14% below its high of $4202.45.

Market participants cited gains after Bitcoin hit that high, increasing sensitivity to global inflation expectations and regulatory difficulties behind this week’s decline.

Concerns that Mt. Gox, the cryptocurrency exchange that collapsed in 2014, was able to liquidate Bitcoin-denominated payments, which also weighed on emotions.

Last week, traders were less willing to pay to become bitcoin long-term. According to cryptocurrency analysis platform CryptoQuant, the average financing rate, a barometer of sentiment in the constant swap market, has dropped to around 0.008%, its lowest level since early October.

A positive funding level means that traders are being regulated because they have to pay to be long.

“Are we going to set a new record at the end of the year? I think we’ve come a long way,” said Paul Aisma, head of trading at New York crypto firm XBTO Group, for $53,000 in Bitcoin. He added that he expects to act between. The rest of the year costs $57,000.

According to market experts, the taproot increase over the Bitcoin weekend is the first major update since 2017 that allows for more complex blockchain transactions.

According to blockchain provider Glassnode, the cost of legacy coins is also increasing, albeit still relatively small, as long-term investors abandon their positions.

The ratio of short-term and long-term Bitcoin holders shows a stable balance between the coin a week and a year ago, which means a balanced distribution of “smart money” between new and old investors. And indicates the period in which integration is possible. The highest price is usually determined when a new investor holds a large number of coins.

The inflow of cryptocurrency products was also limited in the second half of the year and, according to digital asset manager CoinShares, averaged $750 million per day, but initially $960 million.

However, crypto investment products saw $151 million inflows last week for 13 consecutive weeks, with a record $9 billion product inflows last year, according to CoinShares.

“We also showed that we are not too hot in the 60K market. There are still good ways to do this,” wrote Justin Danetan, director of institutional sales at crypto trading firm EQONEX, in the daily newsletter.