Bitcoin’s current range is not yet broken. Yesterday, BTC’s price was seeing a trading session in the green until a surge in negative news contributed to an increase in selling pressure.
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The traditional markets fell as well, adding to the downward price action. Bitcoin was close to $32,000 resistance. Bitcoin (BTC) is trading at $29800, with a 6.6% drop in 24-hours.
Trading desk QCP Capital published a market updateThe rise of Bitcoin dominance is highlighted by the fact that altcoins such as Ethereum are still underperforming. This is a measure of how much of total crypto market capitalization is made up only of BTC. At the moment, it stands at 47%.
Below you can see that this metric last existed in November 2021. This was when the market made a dramatic move up before the December 3rd crash. The Bitcoin dominance trend shifted to the side and remained there until May 2022.
If the upside trend in Bitcoin dominance continues, the altcoin market could experience more pain as BTC’s price remains rangebound. But, there is some short-term relief.
QCP Capital noticed an increase of short positions in the market. In its report, the trading desk stated:
If the above is an indicator of overall market positioning, (i.e. Market is in a directionally weak place, spot prices could have formed a base and there may be more upside for spot markets.
In a separate report, QCP Capital also noted BTC and the crypto market’s capacity to remain “robust” despite the “massive wipe-out” and general selling across the global market. The firm believes this is a “mark of maturity for crypto as a trading and investment asset class”.
Bitcoin in the Short-Term: The Road to $34K
The trading desk also highlighted the potential biggest hurdles for Bitcoin and crypto markets in 2022. Due to the U.S. increasing its money supply, the nascent asset category saw an unprecedented increase in growth between 2019 and 2021.
QCP Capital stated that the U.S. currency supply is now contracting rather than expanding. Below is a chart that shows how the U.S. Money Supply recorded a firm monthly contraction from 2011 to 2015. This indicates more risk for Bitcoins and other risk-on asset. The trading desk was updated:
The upcoming QT balance sheets unwind, which will begin 1 June, will further exacerbate this liquidity drain. These factors will have a significant impact on the crypto price.
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A pseudonym trader thinks there is potential for Bitcoin to rally up to $34,000 in the near-term. Market cap’s number-one crypto is now signaling that it has become too bullish on some metrics, but was still able to keep its rangebound position on other indicators.
#Bitcoin– OBV still chopping, good sign we didn’t break the chop. A little adjustment to an already overinflated pump. #StockFutures are responsible for the selling off and will rescue it. pic.twitter.com/1tBbs6Qrkc
— IncomeSharks (@IncomeSharks) June 7, 2022