Crypto is now below $1 trillion in total market capitalization, and it has returned to January 2021 levels. The sector was anticipating a huge bull run, which would increase its market capitalization to more than $3 trillion.
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The sector appears to be in danger of further losses, and may need to take a new step down towards its 2020 level. The total cryptocurrency market capital is $870 billion at the time this article was written. This trend continues on the daily charts to the downside.
Analyst Justin Bennett believes the sector will “imminently” take a leg lower. As the market was not able to sustain above $860 billion, Bennett expects it to support $730 billion.
This thesis seems to be supported by the current market conditions and shift in U.S. Federal Reserve’s monetary policy. The relentless selling pressure and a series of negative news items in the space all seem to back it. Bennett shared the below chart. said:
It seems that the next step lower is imminent. This is where we’re probably going. It will take another 15-25% until we reach the TOTAL convergence of support, and our measured goal. For most altcoins, you can expect a drop in value of around 30%
As usual, Bitcoin holds the key for the entire crypto sector as most altcoins tend to follow BTC’s price action. Bennett says that the top crypto could experience a 15%-25% decline if it breaks $20,000
This would send BTC’s price to its next critical support zone at around $19,850 and for the first time in its history below its previous all-time high.
Material Indicators’ (MI) data shows that there are over $15,000,000 in BTC buying orders at $20,000. The opposite is true. There are approximately $9 million of asks orders for BTC at $20,000. This could be a resistance mechanism in the short term.
Bitcoin and the Stock Market: Will Bitcoin Boom?
The benchmark cryptocurrency has been moving in tandem with traditional equities, mainly the Nasdaq 100 Index and the S&P 500. According to Jurrien Timmer, Director of Macro for investment firm Fidelity, the S&P 500 has reached oversold levels. He said:
The weekly stochastics for the SPX: It’s at oversold readings consistent with major bottoms. I don’t believe we’re there yet but we could be getting close. We’re only 1 P/E point away from fair value.
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If equities find a bottom soon, as Timmer claims, Bitcoin and the crypto market could bounce and prevent Bennett’s scenario. As you can see, the drawdown in traditional finance has led to a capitulation, which may favor digital assets.
Here’s a quick summary: There are signs that capitulation is beginning to emerge. We can see it here…1/ pic.twitter.com/1SSYFCj8ir
— Jurrien Timmer (@TimmerFidelity) June 17, 2022