By Frances Yue
The No. 1 cryptocurrency by market capitalization may decline toward $60,000
Bitcoin has fallen below its 50-day average of around $65,800, an important support level, signaling a potential correction of 8% to 12%, according to analysts at CryptoQuant. The coin may decline toward $60,000, the analysts noted.
The No. 1 cryptocurrency (BTCUSD) by market capitalization dropped 2% on Tuesday to around $64,625, according to Dow Jones Market Data. Bitcoin has gained over 50% so far this year but is still down more than 12% from its all-time high of $73,798, reached in March.
The $60,000 level defines the bottom of a trading range with its top at around $71,600, according to Katie Stockton, founder and managing partner at Fairlead Strategies.
“Long-term momentum is positive, so we keep a bullish bias with the assumption that the uptrend will eventually regain its hold,” Stockton wrote in a Monday note.
Still, bitcoin seems to be losing upward momentum in the short term, although its downside appears limited, the analysts at CryptoQuant noted. According to on-chain data, traders have been decreasing their bitcoin holdings since late May.
In particular, demand from so-called whales, or large holders of bitcoin, has been lacking strength, the analysts noted. Whale holdings are increasing at a monthly rate of 4.8%, up from a 2.4% growth rate at the end of May, according to the analysts, but much lower than the 6% to 10% monthly growth rate of whale demand when bitcoin rallied in the first quarter.
Bitcoin’s recent weakness was partly a result of marketwide repricing following the Federal Reserve’s cautious stance on rate cuts at its June meeting, noted Jake Ostrovskis, an over-the-counter trader at Wintermute. The Fed projected one rate cut for the rest of the year, according to the dot-plot forecast released last week. Still, fed-fund-futures traders are pricing in two cuts by the year-end, according to the CME FedWatch Tool.
“Current bearish sentiment may be short-lived as global central banks, like the Bank of Canada and the European Central Bank, have already initiated rate cuts, suggesting a global shift towards monetary easing,” Ostrovskis wrote in a Monday note.
-Frances Yue
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