Crypto: An encouraging rebound in a bear market

Crypto: An encouraging rebound in a bear market

Market Overview

The crypto market cap rose 4.8% to $2.45 trillion, then climbed to $2.50 trillion at the end of the day on Wednesday, a four-week high. This is a strong indication of a base forming and a reversal to growth. The capitalisation level is approaching the 50-day moving average, below which it has been steadily trading since the end of January. Consolidation above this line could be an additional signal of a reversal to growth. On the other hand, this may be just a corrective rebound, as the typical Fibonacci correction range suggests a rebound to $2.53T for the decline since January and to $2.92T as part of a technical recovery from the entire decline since the peak in October. Thus, despite the encouraging momentum, this may be nothing more than a rebound in a bear market.

Bitcoin rose to $74K, breaking through the resistance area of the last four weeks with an encouraging surge. We attribute the magnitude of the short squeeze to the confidence of bears who pulled their stops too close to the market price. The recovery lost momentum near the 61.8% level of the January-February decline and just short of the 50-day moving average. Simply put, the bulls still have to convince the community that the bear market is over.

News Background

Bitcoin jumped above $74K on Wednesday, to its highest level in a month, amid active inflows into US spot Bitcoin ETFs, totalling $1.4 billion over the last five trading sessions.

After five months of decline, Bitcoin has entered the third deepest oversold zone in its history, according to K33 Research. Historically, after such a bear market, the average 90-day return has been 62% (with a 78% probability).

The Kraken crypto exchange was the first to gain access to the US Federal Reserve's payment system. Now, the crypto exchange's subsidiary bank can use the central bank's payment infrastructure alongside other American banks.

According to BitcoinTreasuries, public mining companies are selling off their cryptocurrency reserves en masse. The proceeds are being used to create infrastructure for artificial intelligence.

The FxPro Analyst Team