Three signs of a bearish crypto market

Market overview

The crypto market has been retreating towards the lower end of the range seen over the last couple of weeks, near $2.61T, but at the time of writing has pared its losses to around 1% over the past 24 hours, trading at $2.66T. Once again, the cryptocurrency market is underperforming the stock market, which buyers have pushed to new highs. A key reason for buyers’ caution is the anticipation of the vote on the CLARITY Act. The best performers over the last day have been Dogecoin (+2.4%), Immutable (+2%) and Tron (+0.3%). The biggest declines among the most popular coins were seen in Theta (-8.3%), Internet Computer (-7.8%) and Toncoin (-6.9%).

The sentiment index has fallen for the second day in a row, dropping to 34 from 49. Alongside lagging equities, weak sentiment, and the inability to move into ‘greed’ territory, this is further evidence that cryptocurrencies are not ready to enter a long-term bull market.

Bitcoin fell below $79K at the low point of a 6-hour sell-off on Wednesday evening. A significant catalyst for the sell-off was data showing an acceleration in producer price inflation, prompting a reassessment of the Fed’s plans for the key interest rate. However, right at the start of the new day, buyers are once again in the driving seat, pushing the price of the leading cryptocurrency towards $80K. The stock market quickly digested the negative inflation news, which also bolstered the confidence of cryptocurrency buyers. The declining 200-day MA remains an important line of resistance, serving as a stark reminder of the market’s bearish phase.  

News background

Higher inflation figures have reduced risk in Bitcoin derivatives. Open interest on major crypto exchanges has fallen by nearly $1.25 billion, CryptoQuant notes. Rising inflation is undermining the narrative of a more accommodative monetary policy.

Financial giant Charles Schwab has launched direct trading in Bitcoin and Ethereum, opening access to an initial group of retail clients. Previously, the company offered only indirect investments via ETFs and derivatives.

21Shares has launched the first spot ETF based on Hyperliquid. The fund provides access to the Hyperliquid token without requiring the purchase of the asset, and it includes staking rewards. The Hyperliquid ETF raised $1.2 million on its first day of trading.

The Solana blockchain update, known as Alpenglow, which will increase transaction efficiency 100-fold, is one step closer to deployment on the mainnet. The upgrade has entered the public testing phase and could be ready for launch on the mainnet as early as the third or fourth quarter of this year.