Crypto Market Struggles: Testing the Lower Bound Again

Market picture

The start of the new year has not been easy for the crypto market. Losing over 2% in 24 hours to $3.22 trillion, the market was back at the bottom of the consolidation range since the end of November. The promising start to the year failed to materialise. It is with some trepidation that we now watch the eighth or so attempt to break below $3.20 trillion. Adding to the unease is the fact that last week's upside momentum failed to develop, only attracting sellers. 

A similar return to the lower end of the trading range was seen in Bitcoin, which fell back below $93K on Monday morning. Technically, this is the 61.8% pullback level from the rally since early November. In the past, we have seen a solid bounce. However, this may not be the case this time around due to the decline in risk appetite in global financial markets. The next target for the bears looks to be the $88K area. And in a negative scenario, bitcoin will face a quick pullback to $74K.

News Background

According to SoSoValue, BTC ETFs saw net inflows of $307.2 million for the week, up from $245 million the week before, bringing total inflows to $36.22 billion.

The spot Ethereum ETF saw net outflows of $185.9 million for the week, bringing the total inflows since the launch of these products in July to $2.45 billion.

Glassnode noted that open interest in bitcoin futures is showing 'downward speculative momentum'. This indicates that traders are closing positions in response to uncertain market conditions.

Glassnode noted that long-term Bitcoin holders continue to sell coins but at a slower pace. The share of supply controlled by 'new investors' has also increased.

Fidelity said the trend of declining transaction revenue for bitcoin miners may be long-term but does not pose risks to blockchain security. The main driver of the decline in network fees was the launch of US spot bitcoin ETFs in January.

CleanSpark became the fourth miner with bitcoin reserves above 10,000 BTC. Previously, competitors MARA Holdings, Riot Platforms, and Hut 8 Mining had all breached the threshold.

The Coinbase exchange has warned users that it has received a subpoena from the CFTC for customer information. The request relates to an investigation into the Polymarket betting platform, which opened at the end of 2021.

This is the 16th anniversary of the first Bitcoin transaction. On 12 January 2009, the creator of the first cryptocurrency, using the pseudonym Satoshi Nakamoto, sent developer Hal Finney 10 BTC as a test.

By the FxPro Analyst Team