Frightened crypto market chooses a path

Market picture

The sell-off in US stock markets affected global risk appetite late on Monday, reversing initial positivity. As a result, crypto market capitalisation fell 5.4% in 24 hours to 2.29 trillion, back near the weekend lows. The market is hovering near the lows of March. This is a key moment in choosing the market’s direction for the coming weeks. A bounce out of this area will allow for the expectation of an early recovery to the recent highs. A dip below would likely trigger a broader liquidation of positions.

Bitcoin has returned to the area of the lows of the past seven weeks, coinciding with the 61.8% retracement level of the rally from the January lows. Like the crypto market, Bitcoin is choosing between a loosely controlled deepening of the decline or a reversal to growth. On the negative side, the 50-day moving average triggered resistance on Monday.

According to CoinShares, crypto fund investments fell by $126 million last week after inflows of $646 million a week earlier; the small outflow came after two weeks of growth in the index. Bitcoin investments decreased by $110 million, Ethereum - by $29 million, and Solana - by $4 million.

News background

If Bitcoin falls below short-term holders’ support at $58,900, the market risks going into a bearish phase, said analyst and CMCC Crest co-founder Willie Wu. He noted that almost every cycle prior to halving has seen a bear phase due to the ‘overaccumulation’ of the first cryptocurrency.As a result of the Bitcoin halving, only 20 percent of the world’s mining companies will be able to maintain their revenues at levels comparable to the previous period, TheMinerMag calculated. As a result, the mining industry could lose around $10 billion a year of revenue.

After the halving, miners could potentially liquidate $5bn worth of Bitcoin inventory, putting pressure on the price, 10x Research warned. The overhang of this sell-off could last four to six months.

The Hong Kong Securities and Futures Commission (SFC) has approved applications to launch spot bitcoin and Ethereum-ETFs. Matrixport estimates that demand for Bitcoin-ETFs in Hong Kong will reach $25bn.

Bitcoin mining companies will try to mine the first block that appears after the halving to get an ‘epic’ satoshi with an estimated value of several million dollars, CoinDesk reported.

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