Early this month, the leading crypto assets returned some previous gains in early European trading after a special session that moved bitcoin briefly above the 22,000 US Dollar mark, assisted by improving risk sentiment on Wall Street. The token has struggled to maintain its positive territory, though it has experienced significant losses in early trading.
Last week, bitcoin was able to stand at USD 21,366 at 13:30 UTC, while for Ethereum (ETH), trading stood at USD 1,210.
The modest gains for these leading digital currencies followed a strong day in the United States stock market, when some 1.5% was the gain of the brand S&P 500 index, indicating its fourth successive day of gains. Nonetheless, the risk-on sentiment offered a weak signal at the press time, with S&P 500 futures showing an opening 0.6 percent under the closing price.
In an emailed market commentary released early this month, analysts at the crypto exchange Bitfinex explained that what is displayed by crypto in recent weeks as regards the wave of solvency issues and liquidations is an inherent resilience, which has moved to the fore today as the market is showing to be on the green zone.
In addition, they said that hedge funds betting on market capitulation and wider contagion are presently “licking their wounds” after gains for Ethereum and bitcoin. And showed that it would appear great to see if the cryptocurrency market can continue to rise this month.
The analysts also affirmed that an increased appetite for risk had bolstered BTC, as revealed by the four-day winning streak United States’ S&P 500, where technology stocks that have been battered have also recovered.
‘Massive deleveraging’ mostly over
Mike Novogratz, a prominent cryptocurrency proponent and CEO of Galaxy Digital, said that the cryptocurrency market is likely to be at its worst stage already, even though he showed that there is a tendency that it will be “chopping sideways for a while.”
During an interview on CNBC, Novogratz said, “We’ve had this massive deleveraging, and I think most of that deleveraging is now out of the system.” He further explained that there is the possibility of the crypto market going lower; nevertheless, he re-emphasized that “it feels like we’re 90% through that deleveraging.”
An analyst at the digital asset broker GlobalBlock, Marcus Sotiriou, also shared a similar sentiment. He showed early this month in an emailed commentary that “some renewed optimism” is finally seen by the crypto market.
This hope was built due to the reassurances from Sam Bankman-Fried, the cryptocurrency billionaire, and his company, Alameda Research. They showed that there is the availability of “a few billion,” which they can use to reinforce flagging digital currencies firms. Sotiriou expressed that this could mean that the worst of the liquidity crisis falls behind us.
Yet, according to Sotiriou, it is something else that stands as the most crucial factor for the bitcoin price. He said that the persistent data revealing that infallible is convincingly inflecting down is the only BTC bottom signal. He showed that this should lead to the American Federal Reserve turning less aggressive as far as their monetary policy is concerned, and so offer confidence that the crisis of liquidity in the cryptocurrency market has ended.
Positive outlook on-chain
Lead Insights Analyst at Bitcoin mining company Blockware Solutions, Will Clemente, explained while analyzing the bitcoin market from an on-chain perspective that the growing number of active entities on the BTC network could be seen as “the real signal” of adoption.
Clemente presented his argument while sharing a chart of the number of active entities, “Every price drawdown some new market participants leave (that were only here for price going up), but there’s a higher base of people who gain conviction in Bitcoin and stay.”
The CEO of cryptocurrency analysis website CryptoQuant.com, Ki Young Ju, was able to take a contrary approach, pointing out that the so-called Coinbase premium is outrightly a sign that the crypto has started to experience a “recovery from contagion fear.”
According to the Coinbase premium, there is an open space between the spot price of bitcoin on the crypto exchange Binance and on Coinbase. He showed that a rising premium happens to be a signal that US financial institutions are accumulating BTC since more institutions in the United States make use of Coinbase for purchases.
Increased correlation with gold
Kraken, a cryptocurrency exchange, noted in its monthly market update that BTC and the American stock market stood positively correlated for June, without any major transition in correlation over the month.
The correlation of BTC with the inflation hedge gold and traditional safe-haven improved during the month, while the correlation with stocks didn’t experience any change.
In the comment of Kraken, it was revealed that a broader trend of correlations between every asset class that is rising during the significant macroeconomic uncertainty is signaled by the increased correlation.