The crypto market continues to gather momentum for a breakout

Market overview

The crypto market capitalisation has returned to the $2.19T level, retreating into its previous trading range following a flight from risk assets on Thursday evening and the continuation of this trend on Friday morning. The market remains indecisive just above its 50-day moving average, as bearish momentum has already petered out and buyers have found no reason to act. Over the past 24 hours, leading cryptocurrencies have mostly fluctuated between -2.5% and +1.5%. The biggest gains came from Cardano (+7%) and Algorand (+3.2%), while Near (-4.8%) and Avax (-3.9%) led the declines.

Bitcoin made another attempt yesterday to climb above $65K, but once again failed. The consolidation range has narrowed from $58K to $66K in June to just within $62K and $66K over the last 30 days. The good news here is the higher lower boundary, but without a break above recent highs, it is difficult to attract a wider audience of traders and convince them that the bear market is over. On the other hand, the longer the lull, the more dramatic the breakout from consolidation is likely to be. In this case, a breakout above $66K could prove to be a self-fulfilling prophecy, attracting those who have been on the sidelines for a long time. 

News background

Large holders of Bitcoin, Ethereum and XRP are building up their positions while prices remain close to or below the realised price, according to CryptoQuant. This reduces selling pressure and increasingly resembles the final phase of a bear market.

The current situation in Bitcoin should not be viewed as a ‘lull’, particularly given weak trading volumes and limited market depth, warns Tesseract Group. The decline in volatility is a reason to exercise caution regarding leverage.

Activity among small Bitcoin holders has risen sharply following the hack of Coldcard hardware wallets. The volume of transfers has reached a level not seen for almost four years, according to CryptoQuant. Increased activity on the Bitcoin network has historically often coincided with a BTC reversal, K33 Research points out.

A group of developers, informally known as the Bitcoin Red Team, used advanced AI models to identify 4,962 potential security issues across 390 projects related to the first cryptocurrency in just one day. Of these, 85 were classified as critical risk, with a further 635 classified as high risk.

The US Senate has reached an impasse over the CLARITY Act. Senate Majority Leader John Thune has yet to call a vote to end debate, raising the risk that the bill will be delayed until after the August recess. As a result, the chances of it passing this year have fallen to a record low. 

Summary: The crypto market is consolidating around the 50-day MA: BTC is range-bound between $62K and $66K, and a breakout above $66K could bring buyers back.