Very limited rebound in crypto
|Market overview
The crypto market capitalisation grew by 1.7% in 24 hours to $2.65 trillion. Once again, the positive sentiment in global financial markets came to the rescue of crypto. BNB is leading the rebound, benefiting from the support of the founder of Binance and Doge, which was mentioned again by Musk. At the same time, local resistance has formed in the market at $2.65-2.68 trillion, where the rebound has been losing momentum since the beginning of the month.
Bitcoin is trading above $78K, about 5% higher than Monday's lows, but hitting resistance from 1 February. This limited rebound is causing bearish sentiment about the immediate prospects for Bitcoin and the whole crypto market.
News background
According to CoinShares, global investment in crypto funds fell by $1.696 billion last week, following an outflow of $1.732 billion the week before. Investments in Bitcoin fell by $1.321 billion, in Ethereum by $308 million, in XRP by $44 million, in Solana by $32 million, and in multi-asset funds by $14 million.
The options market indicates that investors are beginning to form positions in anticipation of a local bottom. Long-term Bitcoin investors have moved into unrealised losses, which allows the market to transition into an ‘extremely bearish’ phase, according to CryptoQuant. The market has also been negatively affected by a persistent lack of liquidity for several months.
Bernstein expects the crypto market decline to end when Bitcoin reaches the highs of the previous cycle in the $60,000 range. The subsequent reversal will lay the foundation for the ‘most significant cycle’ for BTC.
Meanwhile, Bloomberg Intelligence strategist Mike McGlone reiterated his forecast for the current year, according to which Bitcoin could fall to $10,000. In his opinion, the current year may resemble the crisis years of 2008 and 2000-2001.
Corporate Ethereum holders suffered a major loss after the asset's value fell. According to BitMineTracker, the ‘paper’ losses of BitMine, the largest holder of the second-largest cryptocurrency, amounted to $6.95 billion. Investor Ross Gerber called this ETH purchase potentially ‘the worst deal in history.’
Hong Kong-based Trend Research has already begun to reduce its positions, selling 33,589 ETH ($79 million) at a loss. Japanese financial holding company Nomura is also reducing its investments in cryptocurrencies. However, Strategy continues to buy, acquiring another 855 BTC ($75.3 million) over the past week at an average price of $87,974.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.