• Bitcoin (BTC, Tech/Adoption Grade “A-”) is 5% lower today, and it currently trades around $33,000.
• Ethereum (ETH, Tech/Adoption Grade “A”) has dropped another 7% in today’s trading, and it’s slipped down to $1,850.Bitcoin’s dominance over the crypto market increased another 240 basis points to 47.2%.
Bitcoin has struggled since hitting its peak near $65,000. Over the past week, we saw the King of Crypto set a new low below $29,000, which is not a promising signal.
While it did not close below the $30,000 critical support level, its breakdown has traders contemplating the end of the bull market.
Bitcoin still has many hurdles to cross as it looks to restart its uptrend, including the typical bull market support levels that have turned into resistances: the 200-day moving average, which is at about $40,300 and the 21-week moving average, near $41,600.
A retest of these levels would be a welcomed sign, but Bitcoin has been trending in the wrong direction recently.
Its 21-day moving average could also pose as a potential resistance, piling on to list of current headwinds.
Meanwhile, the broad market is also showing weakness as Bitcoin’s market dominance level just passed 47% for the first time since the beginning of May.
Here’s Bitcoin’s price in U.S. dollars via Coinbase Global, Inc. (Nasdaq: COIN):
Ethereum has shown greater recent weakness than Bitcoin lately. After breaking down below the bottom of its recent trading range around $2,200, the second largest cryptocurrency by market cap fell below its established low on May 23 to about $1,700.
Like Bitcoin, Ethereum did not close under the previous low of around $1,725, but it’s still concerning that it failed to bounce before dipping below it. Ethereum sits considerably below its 21-day moving average, and a move back above it would be a positive short-term signal.
Here’s Ethereum’s price in U.S. dollars via Coinbase:
Index Roundup
The crypto market had a rough seven-day trading week ending Thursday. Almost the entire market saw significant declines, and key support levels were temporarily broken.
The most established cryptocurrencies were able to hold their value more effectively when compared to the more speculative altcoins, which saw major outflows.
The Weiss 50 Crypto Index (W50) lost 16.68%, as not even the biggest names were exempt from the pullback.
The Weiss Crypto 50 Ex-BTC Index (W50X) dropped 19.97%, illustrating that Bitcoin suffered less than the broader market.
Breaking down performance this week by market capitalization, we see almost no cryptos were spared from the decline.
The Weiss Large-Cap Crypto Index (WLC) fell 16.87%, notably slipping the least because its crypto assets are more widely adopted with further proven use cases.
Mid-sized cryptocurrencies struggled more than the large-caps, but they still bettered their smaller counterparts. The Weiss Mid-Cap Crypto Index (WMC) declined 26.64%.
The small-caps were the biggest losers the week, as the Weiss Small-Cap Crypto Index (WSC) plummeted 40.15%.
This week’s trading saw a sharp reversal from last week, where the small-caps were the best performers. It appears safe to say that altseason is in the rearview mirror for now, as investors will likely look for Bitcoin and other large caps to move before hopefully igniting another uptrend.
Until that happens, the broad market will likely remain in limbo.
Notable News, Notes and Tweets
• Pomp emphasizes that on-chain metrics suggest strong-handed investors are loading up on more Bitcoin.
• Nayib Bukele, the President of El Salvador, taught the country how Bitcoin works in a presentation.
• The venture capital firm Andreessen Horowitz raised $2.2 billion for its third crypto fund.
What’s Next
We saw a chunk taken from the crypto market’s total value during the past week of trading. While a bear market is not a confirmed reality, investors are grappling more and more with the idea.
While it would be very encouraging to see a sharp rally, the greater likelihood is that we will see an extended period with trading bouncing up and down. A period of consolidation over the next couple of months could bring higher lows and lower highs.
As frustrating as that would be, it does fit with our model says for the four-year crypto cycle. Between the third, “bullish” phase and the fourth, “parabolic” phase, we expected a period of consolidation.
It’s quite normal for the low-end of a trading range to be re-tested (sometimes more than once) during periods of sideways trading, but usually we do see cryptos trade above their support more securely.
Without that, the broader sentiment towards the crypto market has worsened over the past several weeks, despite the largest cryptocurrencies not yet closing below their May lows.
Regardless of short-term weakness, the long-term prospects for crypto look extremely bright. Our macroeconomic climate points to higher inflation, and Bitcoin’s adoption continues to advance forward. While short-term indicators look choppy, crypto’s long-term outlook is strongly positive.
Best,
Sam
