Cryptocurrencies are losing heavily. Bitcoin and Etherum are dragging the cryptocurrency market down! 📌📉
Cryptocurrencies lost significantly over the weekend. Bitcoin slipped below $27,000 and Ethereum broke important supports, slipping to levels at $1,400. Almost all altcoins are wiping out gains initiated in 2020 and continued in 2021, with Polygon, Kusama, Polkadot and Chainlink losing heavily, around which bullish expectations were exaggerated just a few months ago. 'The king of cryptocurrencies' is back to levels at $25,000 that have not been seen since the panic caused by the Luna crash. Looking at the waning strength of demand, a deeper, dynamic move south remains unlikely.
- Sentiment around cryptocurrencies was worsened on Friday by alarming data from the US economy (record low investor sentiment according to data from the University of Michigan and a higher than expected inflation reading). Bitcoin dived along with US indices, once again showing the correlation. Investors fear monetary tightening by the Federal Reserve, which bankers may be prompted to do by an alarming inflation reading;
- Fuel for the declines was added by expiring 'call' options on Friday, which prompted traders forecasting a rebound to close positions. The decline below key supports was also boosted by the removal of leveraged positions from the market;
- Ethereum network struggles. Ethereum's developers announced on Friday another postponement of the transition to the long-announced version 2.0 and thus also the date of the 'difficulty bomb' that investors are waiting for. The postponement had a problem with identified bugs in the Ropsten test network. Its task will be to get miners to stop mining new Ether and limit supply. Ethereum wants to eventually introduce an organic 'Proof of stake' transaction approval model;
- Ethereum's head of developers, Tim Beiko, has indicated that the 'merge' is likely to happen this year and the chances of it being postponed until 2023 are slim at 1 to 10%. Beiko is concerned about overwork and decreased efficiency of developers working on the rollout of version 2.0. In May, Vitalik Butern pointed to September and October of this year in the face of the announced August deadline;
- Investor anxiety was heightened by the 'depegging' of stETH (staked by ETH validators) against the ETH exchange rate. Ethereum's tokens affected by staking are ultimately to be blocked from the Ethereum network and used to validate transactions on the network after the transition to version 2.0 and the introduction of 'proof of work'. Staking on the network was also of interest to financial institutions because of the rewards for approving transactions. With the price of staked Ethereum tokens falling against Ethereum itself, the network shows the technological inadequacies and risks still behind the seemingly 'safe' staking;
- The Celsius network, one of the largest decentralized financial platforms and cryptocurrency lenders, suspended withdrawal and transfer capabilities today. Investors are clearly fearing a situation similar to the Luna crash. One of CryptoQuant's analysts, Burac Tamak in an interview with Bloomberg, indicated that the decline in Celsius' stock is related to the realization of risk in the LUNA/UST-like financial tool. The crypto world is expecting close scrutiny from regulators investigating cryptocurrency financial products with high returns on passive investments (similar to Ancor Protocol on the Luna network). The situation with the Celsius network once again casts a pall of fear over the bull-dropped cryptocurrency market;
- Cryptocurrencies are losing despite positive news about blockchain technology from celebrities in the financial world like Jack Dorsey and chess grandmaster Garry Kasparov. Over the weekend, Edward Snowden also spoke out, who has a positive view on the future of cryptocurrencies, but is concerned about their 'financialization' (orientation towards profit) at the expense of technology, which should be the foundation of the projects;
The beginning of the week brings strong declines in the cryptocurrency market. Source: xStation 5
Bitcoin prices, D1 interval. The largest of the cryptocurrencies is currently fighting to maintain this year's lows (12.05.2022). A fall below these levels may trigger avalanche liquidations of hedging positions, which could potentially encourage bears to continue the downtrend. It is worth remembering that this week is fundamental in terms of macro policies of major central banks. On Wednesday, the FOMC will decide on rate hikes. Source: xStation 5
Ethereum price, D1 interval. The second largest cryptocurrency suffered even more from the ongoing dynamic declines since Friday. ETH has broken out below 2-year support and is currently struggling to hold the $1,300 level. The cryptocurrency has already fallen more than 70% since its peak. Source: xStation 5
