After briefly re-testing higher levels, Bitcoin and the crypto market retraced and gave back the gains obtained over yesterday’s trading session. Market sentiment was negative with most participants anticipating further losses.
Bitcoin is trading at $19600 as of today’s writing. This price includes losses of 3% to 8% and loss of $700 over the previous 7 days and 24 hours, respectively. With a loss of 3.7% and 4% respectively, the first crypto market cap ranking is not far behind Ethereum or Dogecoin.
The daily chart shows that the crypto market cap had consolidated between $800 billion to $1.2 trillion since April and June’s massive crash. It was moving upwards, finding support along a trendline over the past week.
The sector may not be able to maintain its current level as the daily chart suggests further losses, and possibly a retest of the June lows around $800 billion.
Santiment data shows that short positions have increased as digital assets move lower. The chart shows that traders are shorting Bitcoin’s price as it consolidates.
This sudden rise in funding rates has seen them move into positive-negative territory. It means traders expect bearish price action. This market participant is in trouble, as the chart shows.
The market will trend the opposite way in August if traders are positioned for greater gains or loss. The market went up last week and shorts suffered, while longs felt the pinch when it turned the other way. Santiment said:
If prices experience a significant price drop, traders will continue to shorten them. According to the $BTC average funding rate across Binance, BitMEX, DYDX, and FTX, the reaction to Friday’s drop was the most aggressive traders went against markets since May.
Are Crypto Investors Ready for a New Relief Rally?
Justin Bennett provided additional data that indicates the cryptocurrency total market cap fell below an important trendline. Bennett is unsure if the chart indicates a pullback from previous support.
This could lead to cryptocurrency making a profit of 3% to 55% before the crash, which would be around $800 billion. This pullback may indicate a major crash for the altcoins industry. Bennett said:
And to anyone who says altcoins won’t pull back that far…They already did once. Alts retreated more than 90% in last bear market. So, to think they’ll stop at -74% this time with raging inflation, a global recession, etc. I think this is foolish.
— Justin Bennett (@JustinBennettFX) August 29, 2022