Bitcoin's 200-week MA: History points to an 11-month wait

Market overview

The crypto market capitalisation has fallen by 2.7% to $2.12T, failing to establish a sustainable growth trajectory. At the time of writing, the market has not yet reached Friday’s lows, but it is quite possible that it will test this support level again before the end of the day as the rebound momentum fades. The top coins that fell the most over the day were Stellar (-7.9%), Dash (-7.6%) and Zcash (-7.3%), while SushiSwap (+0.7%), Cosmos (+0.7%) and Immutable (+0.5%) outperformed the market with minimal gains.

Bitcoin fell below the $61K level again on Tuesday amid a renewed decline in stock indices. This was followed by a slight rebound and current price stabilisation near $61.5K. It appears that a sell-on-rally trend is prevailing in the leading cryptocurrency. The history of the 200-week moving average over the last 11 years (prior to this, the market had not dipped below it) shows that the average time spent near it is almost 11 months, suggesting a very long bear market. The exception was the Covid crash in March 2020, as the subsequent policy of easy central bank money and spending restrictions led to a rapid price recovery. As markets expect interest rate hikes, we should not count on a short-term rebound until there is a global extreme shock. 

News background

CryptoQuant has observed an increase in inflows to Bitcoin exchanges of coins that have been dormant for between three months and a year. Such activity by medium-term investors could create additional selling pressure and hinder the recovery.

The recent decline in BTC was driven by spot market selling rather than speculative activity in the derivatives market, according to 10X Research, which expects a short-term recovery in Bitcoin by the end of the week.

Two key factors will influence Bitcoin in the second half of the year: Strategy’s ability to fund $1.7 billion in dividend payments and the passage of the US CLARITY bill on stablecoin yields, according to JPMorgan. CLARITY could not only clarify the regulatory framework for the US crypto market but also bolster confidence in the crypto industry and support the inflow of corporate capital.

Major US financial firms view Bitcoin’s recent drop to $60K as a good opportunity to replenish their reserves, rather than a cause for concern, according to Coinbase. They view Bitcoin as a long-term asset worth accumulating.

Strategy shareholders have approved a change to the dividend payment schedule for STRC preference shares. Instead of monthly payments, the company will pay dividends twice a month, in half-payments. Strategy CEO Fong Le believes this should stabilise the value of the shares, increase liquidity and boost demand for them. 

Summary: Bitcoin remains under pressure below $61.5K, while the crypto market's weakness and rising BTC inflows to exchanges are reducing the chances of a quick rebound.