Market Overview
The crypto market cap grew by less than 1% to $3.04 trillion. Since October, it has become the norm for cryptocurrencies to pay particular attention to negative news and react weakly to positive news. This time, the impressive rebound in stock markets only helped stop the sell-off in the crypto market and led to a modest rebound in cryptocurrencies from local lows. The momentum of the rebound was not even enough to overcome the 50-day moving average, underscoring the current dominance of bearish sentiment in the crypto market.
The sentiment index further highlights the extreme fear, losing 41 points over the last seven days of decline. After touching the greed zone last week, profit-taking emerged. While risk sentiment improved following developments in Davos yesterday, it was not strong enough to trigger a sustainable rebound in crypto.
Bitcoin jumped from $87K to above $90K at the end of the day on Wednesday, but has since faced active selling as it approaches the round level, although it has not experienced significant declines due to increased risk appetite. Technically, BTC remains just below its 50-day moving average and below the former support line of the uptrend. Despite yesterday’s retreat from local lows in Bitcoin, the picture remains bearish with a higher chance of a resumption of the decline, at least to $84K, and to $80K with a more extreme downward momentum.
News Background
Markets have gone into ‘defensive mode’ due to economic turmoil in Japan and political tensions, according to QCP Capital. Instead of acting as a hedge, the first cryptocurrency is behaving like a risky asset, sensitive to interest rates and macroeconomics.
For the first time in history, control of the market has shifted from long-term holders to ‘new’ whales who entered the market in the late stages of the cycle, CryptoQuant points out. The average purchase price for this group is around $98K. And until the market absorbs their loss-making supply, sales will prevail in BTC.
In the first half of the year, the crypto market may fall by 15-20%, and its recovery will begin in the fourth quarter, said BitMine CEO Tom Lee. In his opinion, Bitcoin will retain its status as digital gold and could reach $250,000 in the long term.
Ripple President Monica Long said that the coming year will be a turning point for the industry — cryptocurrencies will finally become integrated into the global financial system and will no longer be perceived as an alternative to traditional finance.
