Cryptocurrency market indicators such as the average bitcoin funding rate, inflows into crypto investment products, and the ratio of old to new coins being sold suggest a consolidation in the crypto market. Short time horizon for the sector and lower bitcoin price appreciation are anticipating.
Bitcoin jumped 1.6% on Friday to $57,850.56 but is on track to drop more than 11% on a weekly basis, its worst week since May. It is 16% below the November 10 record high of $69,000. Ether, the second largest cryptocurrency by market value, is down 14% from its peak of $4,202.45.
Market participants said profit-taking after bitcoin hit that high, given its growing sensitivity to global inflation expectations and the regulatory conditions behind the week’s drop.
Fears that creditors of Mt Gox, a cryptocurrency exchange that collapsed in 2014, might liquidate their bitcoin returns also weighed on sentiment.
Over the past week, traders have become less willing to pay to hold long positions in bitcoin futures. The average funding rate, a gauge of sentiment in the perpetual swaps market, has dropped to around 0.008%, according to crypto analytics platform CryptoQuant, its lowest level since early October.
A positive funding rate implies that traders are bullish, as they have to pay to hold a long position.
“Are we going to set new highs before the end of the year? I’d say we’re gone,” said Paul Eisma, head of trading at crypto firm XBTO Group in New York. go a long way.” and $57,000 for the rest of the year.
Bitcoin’s Taproot upgrade over the weekend, the first major update since 2017 that allows its blockchain to perform more complex transactions, is marked by fine telegraphs and is valued largely when funds are sold. product focus on the event, market experts said.
According to blockchain data provider Glassnode, there has also been an increase in spending on older coins – related to long-term investors exiting their positions – although it is still small in magnitude. relative, according to blockchain data provider.
The ratio between short- and long-term bitcoin holders signals a steady balance between 1-week-old and 1-year-old coins, meaning a balanced distribution among “smart money” investors. newer and older and indicates a likely period of consolidation. Price peaks are usually established when large volumes of coins are held by newer investors.
Data from digital asset manager CoinShares shows that on Monday of last year, inflows into crypto products also declined, averaging $750 million per day compared with $960 million in first year.
However, crypto investment products attracted $151 million in investments last week for their 13th straight week, and total product inflows for the year have so far hit a record $9 billion. dollars, according to CoinShares.
“It alludes to the fact that we’re not too hot in the 60K market either. There’s still a good way to go,” wrote Justin d’Anethan, director of institutional sales at crypto exchange EQONEX. in a daily newsletter.
Altcoins Falter
The broader Nasdaq crypto index, which tracks popular digital assets like Litecoin, in addition to bitcoin and ether, is tracking a weekly drop of 9.8%.
Among the so-called “meme coins,” dogecoin, which was created as a joke for early crypto adopters and has grown by more than 4,000% this year, is up 2.5% at 0.23 dollars on the day, according to CoinGecko, while the recently popular Shiba Inu is down about 17% in the past 7 days.
According to CoinGecko, the total market capitalization of cryptocurrencies stands at $2.7 trillion, down from a peak of more than $3 trillion.
