The capitalization of the cryptocurrency market has risen sharply over the past few days. This event, which seems like an important step in the recovery of the industry, can turn out to be a real trap.
Strong return of the crypto industry?
Do cryptocurrencies mark the end of the crypto winter after a long period of lull punctuated by investor withdrawal? This is what you might think at first glance, because all the indicators are there.
Indeed, the crypto market on Monday, July 18, found a capitalization in excess of $1,000 billion. What unloaded the industry after a sharp drop in the latter, which happened at the end of June. The market capitalization of digital currencies was then the lowest since November last year. It didn’t take long for the market to recover from this bad patch.
If at that time this phenomenon followed the downward movement of Bitcoin, then this month’s clear increase is no exception to the rule. Indeed, the little orange coin has managed to hold its own around $20,700, which is seen as a major resistance. The first cryptocurrency experienced a strong rebound, causing its price to rise to $22,000. At the time of this writing, Bitcoin is worth almost $23,400.
Ethereum is not going to be left behind with a 9% rebound at the beginning of the week. A trend quickly followed by other digital currencies. This phenomenon is now like a big breath of fresh air in the market. Even better, it means that the wave of sales that rocked prices has finally come to an end. As such, investors seem to have regained the confidence they lacked and are starting to buy back a few coins. A phenomenon picked up by the Fear and Greed Index, whose scores went from “extreme fear” to “fear”.
However, the end of winter is not yet in sight.
Despite this apparent market recovery, it is worth remembering that the end of the crisis has not yet been confirmed. If the public slowly recovers its investment habits, a relapse is not excluded. Similarly, while bitcoin is now in an enviable position, the rest of the cryptocurrency is still in the red.
Analysts say bitcoin’s rapid rally is just a trap. So this may be temporary and current investors may be biting their fingers soon. Thus, the crypto winter is not over yet, as some changes in the situation may still occur.
However, not all experts are so pessimistic. There is virtually no chance of Bitcoin falling below $19,000, according to analyst Kaleo. On the contrary, the small orange figure will begin its big comeback.
Source: Kaleo Twitter account.
Optimism supported by Xavier Feno, trader at Interactiv Trading, during the intervention for BFM Crypto. According to him, the worst will be behind us, and Bitcoin’s correlation with traditional markets will confirm this.
We saw that traditional markets did not react too badly to the US inflation announcement last week. It was rather a pleasant surprise, rather unexpected. The market is already forecasting itself for 2023, so the “worst” is already priced in.
Excerpt from Xavier Feno’s speech for BFM Crypto
An enthusiasm that could predict both the worst and the best for the coming weeks. Therefore, experts’ forecasts should be taken with a pinch of salt, and caution is still advised for those who would like to invest.
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