Possible short-term bottom

TL;DR:

  • Our market view (mid-July):
    • Short-term: Neutral
    • Long-term: Negative
  • It has been another challenging quarter for crypto markets.
  • Crypto Total Market Cap (TOTAL) declined by an additional 32.5% in the previous month.
  • Three Arrow Capital liquidation forced a lot of crypto assets into a fire sell.

Market overview

It has been another challenging quarter for all markets after what had already been a tough start to the year.

The long term market trend remains negative. The Crypto Total Market Cap Index (TOTAL), which calculates the return of major 125 cryptocurrencies by market capitalization, lost another -32.5% in June, while the year-to-date return is even worse, at -60,38%. Index TOTAL found support at the peak price level (at $3.0bn) of the 2017 bull market, while the price slipped below $1.0bn in June. Consequently, the drawdown was around 70% of the TOTAL index price in the last 33 weeks. We believe the economic cycle hasn’t found its long-term bottom yet, whether short-term bottom can be in. We expect lower values later in the year, although crypto assets might experience a short and intense (2-6 weeks) bear market rally in the meantime. If you study the last bear market (2018) Crypto, Total Market Cap Index declined by 87% in 49 weekly bars with no economic recession.

In 2022 global macroeconomic environment is not as strong as in 2018. Considering all current facts about the macroeconomic environment, it is only a matter of time until the Fed realizes that conditions are so bad that they need to shift monetary policy from restrictive (hikes) to accommodative (declines). There are no realistic chances that a new economic cycle can begin until Fed starts to decline interest rates. Until the Fed changes its direction, all risky assets will be under pressure, with occasional short-term price reliefs.

TOTAL_2022-07-28_13-14-07_9c7e6

Long term view is still negative until the Bitcoin price stays below crucial (weekly) trendlines.

BTCUSDT_2022-07-28_13-12-45_1687e

In the short term, the crypto market price trend is neutral with sideways price action in July. Our short-term market view is neutral.

Crypto market view (2022-06)

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DISCLAIMER: This article is for informational and discussion purposes only and does not constitute a marketing message, an investment survey, an investment recommendation, or investment advice. The article was prepared exclusively for a better understanding of market dynamics.