Crypto market tests support again

Market Picture

Market capitalisation fell to $3.22 trillion on Friday morning from a peak of $3.47 trillion at the end of Wednesday amid a flight from risk assets due to the conflict between Israel and Iran. In recent hours, the market has rebounded from the support line that has been in place since May, reaching $3.28 trillion. Technical levels are working in the short term, but they may prove powerless in the event of a broader liquidation of bulls with a breakout of support in the $3.20–3.25 trillion range. In this case, the market could easily drop to $3 trillion or even target cyclical support in the $2.50 trillion area.

Bitcoin fell to $102.5K at the start of the day in Asia, repeating its touch of the 50-day moving average, as it did a week earlier. Although the reaction of the first cryptocurrency was sharp, the recovery to $105.0 at the time of writing indicates strong interest in buying on dips. At the same time, we do not support the idea that military conflicts are favourable for cryptocurrencies.

News Background

LVRG notes that investors are increasingly viewing Ethereum as an undervalued asset as the SEC hints at possible concessions for DeFi.

Santiment notes bullish sentiment among retail investors and a lack of desire among whales to lock in profits despite Bitcoin’s proximity to historic highs.

Bitcoin on-chain data signals a reduction in supply. Despite low retail investor activity and recent negative funding rates, large players continue to accumulate the asset, CryptoQuant notes.

The number of coins in centralised exchange wallets continues to fall, dropping to 2.5 million BTC — the lowest since August 2022. Over-the-counter (OTC) platforms used for large transactions are also experiencing a shortage. Their reserves have fallen to an all-time low.

The Bitcoin market has undergone a structural transformation towards institutional maturity. According to a report by Gemini and Glassnode, 30.9% of the available supply of BTC is held in the reserves of exchanges, ETFs, companies, and governments. This will contribute to a ‘more sustainable and orderly rally’, as opposed to the sharp spikes seen previously.

Tether acquired nearly 32% of the shares of gold mining company Elemental Altus Royalties for $89 million. The investment is part of Tether’s strategy to strengthen its position in the asset segment, which is backed by real values such as gold and Bitcoin.

The FxPro Analyst Team