Crypto: The market is set to test the strength of the downtrend

Market Overview

The crypto market capitalisation has risen by 2.3% over the past 24 hours to $2.19T. Still, we see the market’s ability to absorb the news of Strategy selling bitcoins from its reserves as the key development. The market began to recover from the initial dip fairly quickly, adopting a pragmatic stance regarding the scale of the sell-off. Although a test of the previous high is still to come, market capitalisation is approaching the 50-day moving average; a sustained move above this level would be an important confirmation of a reversal towards a bullish trend. Among the most active coins, the top gainers over the past 24 hours were Aptos (+6.1%), Internet Computer (+3.8%) and VeChain (+3.7%). Lagging were Stellar (-2.3%), Gram (-2.1%) and Hedera (-1.6%).

The sentiment index has risen to 27, emerging from the ‘extreme fear’ zone where it had remained for 40 days. That said, we once again advise waiting for a sustained move above the 50 level before concluding that the market has reversed. This is because such a move has not been achieved since last November.

Bitcoin climbed above $64.5K at the start of the day, posting a bold 5.5% rise following the initial reaction to reports that Strategy had sold $226 million worth of the leading cryptocurrency. However, this momentum was short-lived, and we saw a pullback to $63K. Should the uptrend continue, it is worth monitoring Bitcoin's performance around the $66K mark. A sustained move above this level could be one of the first signs of a trend reversal. However, we cannot rule out an intensification of selling pressure, as seen mid-last month.  

News Background

Last week, Strategy sold 3,588 BTC (around $226 million) at an average price of around $60K per coin. Strategy’s reserves fell to 843,775 BTC, purchased at an average price of $74,476 per BTC. The proceeds were used to pay dividends on STRC preference shares.

According to Visa, the monthly volume of transactions involving stablecoins rose to a record $1.79 trillion in June. The figure jumped by 63% compared with May and by 125% year-on-year. Circle’s USDC accounted for the bulk of the volume in the first month of summer, making up around 67%.

Around one million people lost a total of $3.8 billion on investments in the US President’s TRUMP meme coin, according to Nansen’s calculations. In a recent financial disclosure, Trump reported receiving $636 million from the TRUMP token.  

The crypto market has rebounded after digesting the Strategy sell-off. Key reversal signals include the market capitalisation consolidating above the 50-day MA and BTC trading above $66K.