Cryptocurrency market uncertainty as a sign of suppressed retail risk appetite

Market Overview

Cryptocurrency market capitalisation has gained 2.5% over the past seven days to $3.85 trillion, demonstrating a very modest and erratic recovery without buyer euphoria or significant volumes. The crypto market capitalisation remains below its 50-day moving average, indicating the prevalence of bears in the market. This is a very worrying indicator of underlying risk appetite in financial markets. Although stocks are offsetting the weakness in the labour market with growth in anticipation of Fed dovishness, the weakness of the economy is still negative for retail customers, the driving force behind prices.

The sentiment index fell into fear territory on Sunday at 44, but returned to a neutral 51 on Monday, reflecting a wait-and-see stance.

Bitcoin continues to hover around $111K, crossing this mark up or down every day for the past seven days. Since the beginning of September, an upward line can be drawn through the local price lows, but BTC has gained about 3.6% during this time, more than the losses on 28 August alone.

News Background

The total volume of corporate Bitcoin reserves reached a record 840,000 BTC in August, but their growth rate and transaction volume fell to annual lows, according to CryptoQuant. This indicates a weakening of institutional demand.

The altcoin season has already begun, but only for those coins that large companies have included in their reserves, according to Bloomberg. Another potential driver of the alt season could be the approval of crypto ETF applications in the US. About 10 assets are expected from the SEC, including Dogecoin, Chainlink, Stellar, Bitcoin Cash, Avalanche, Litecoin, Shiba Inu, Polkadot, Solana and Hedera.

Stablecoins are gaining popularity because they offer businesses faster, cheaper and more reliable payments than traditional systems, said Stripe CEO Patrick Collison.

The Financial Times has learned of Tether’s plans to buy gold. According to the publication’s sources, the issuer of the USDT stablecoin has been discussing investing in the entire precious metal supply chain, which includes mining, processing, trading, and royalties.

The FxPro Analyst Team