Crypto: Tactical Retreat from the Peak

Market picture

The cryptocurrency market lost 2% of its capitalisation in 24 hours to $2.41 trillion. However, this is a pullback from a high base. This tug-of-war between bulls and bears points to the importance of the current situation. Bitcoin and Ethereum are losing just over 1% each, while most altcoins are losing significantly more, ranging from 2.5% (BNB, Solana) to 3.5% (Dogecoin, Toncoin). The positive exception is XRP, which has maintained its 1.2% gain, although it has retreated 4% from its late-afternoon peak on Monday.

Bitcoin remains within a broad downward range for now, pressured by news of a new series of BTC transfers to exchanges from Mt. Gox. The previous actions did not lead to an extreme sell-off but kept the price from rising. The big question is how deep buyers’ pockets will be, given recent reports from Bloomberg citing RSM Global that the UK may sell 61,245 BTC ($4B) confiscated in 2018. The constant overhang of selling forms a series of lower price peaks.

Solana formed a peak above $180 earlier in the week, roughly reaching the levels of the May highs. In the short term, on a daily time frame, the RSI has moved out of the overbought territory, indicating the potential start of a correction. Looking at the medium-term outlook, Solana is behaving more confidently than many altcoins after strong support at 61.8% and the 200-day average in June and July.

News background

According to CoinShares, crypto fund investments rose by $1.353B last week after inflows of $1.439B a week earlier; the figure is up for the third consecutive week. Bitcoin investments increased by $1.277B, Ethereum by $45M, and Solana by $10M.

CryptoQuant noted that the market has seen a decrease in selling pressure from large investors as the price of the first cryptocurrency has consolidated near $67K. Meanwhile, realised gains for BTC holders are ‘minimal compared to March or May’.

BRN notes that Ethereum options have seen a sharp rise in implied volatility (IV). This suggests the risk of a wave of selling after the ETF launch to the $2800-3100 range, with a gradual recovery after that.

The ETF Store believes applications to launch ETFs based on a basket of assets, including Bitcoin, Ethereum, and Solana, will emerge in the next few months. According to Bloomberg, the SEC could register the Solana-ETF in mid-March 2025.

The FxPro Analyst Team