Bitcoin & Crypto Slip Amid Signs of Exhaustion

The crypto market saw declines across the board over the past 24 hours, as bitcoin (BTC) ended the week below a key technical level and market participants appeared uncertain about the near-term direction.

Bitcoin & Crypto Slip Amid Signs of Exhaustion

As usual, the crypto sell-off was accompanied by liquidations of leveraged derivatives traders, with long liquidations of leveraged bitcoin positions reaching USD 12.7m in the four hours from midnight to 4 am UTC on Monday.

Still, the level of liquidations was not out of the ordinary, with a sell-off as recently as last Friday leading to even larger liquidations.

Source: Coinglass

Meanwhile, fresh data from the crypto investment and research firm CoinShares on Monday showed that crypto-backed investment funds once again saw inflows last week. In total, the week ended with inflows of USD 30m, with USD 19m of those flowing into BTC-backed funds.

Following bitcoin, the second-most popular cryptoasset among fund investors last week was ethereum (ETH), with USD 8.1m of inflows. The multi-asset fund category was the only category that saw outflows last week, with USD 2.3m pulled out.

Source: CoinShares

Notably, the latest data release from CoinShares also included a correction of the numbers from the prior week, when USD 12m of inflows was reported overall for the sector. After accounting for late reporting of trades, that number has been adjusted to USD 343m – the largest weekly inflows seen in crypto investment funds since November 2021.

The inflows came despite bitcoin ending last week below the key 200-week moving average line. The line – by many considered a key technical level that BTC has never traded below for any prolonged period of time – is currently at USD 22,786, with the bitcoin price trading below it since Sunday night in Europe.

BTC weekly chart with 200-week moving average:

weekly chart
Source: TradingView

On Monday at 10:55 UTC, BTC traded at USD 22,058, down 2.1% over the past 24 hours and up 5.9% for the week.

Other than bitcoin, other major coins that stood out at the time of writing included ETH, which was down 2.4% for the past 24 hours to USD 1,547, and solana (SOL), which traded down 3.2% to USD 39.1. SOL is up 1% on a 7-day basis, while ETH increased by over 15% over the same time period.

‘Signs of exhaustion’ in the market

Commenting on the outlook for the crypto market before the weekend, Singapore-based crypto trading firm QCP Capital wrote in an update that they are “not sure if the upside momentum continues in a big way.”

“The speed of this move higher felt positioning-driven (market was caught short) and the market is starting to show some signs of exhaustion,” the trading firm wrote.

The latest update from QCP Capital marks a softening in the firm’s bearish stance from early July, when it said its “positive outlook is waning” and warned that “any significant upside will be capped in the near term.”

Others, including the on-chain analysis firm Glassnode, pointed to some early signs of bullishness in Bitcoin, given the elevated transaction fees that have been seen on the network since the collapse of the Terra (LUNA) network.

“A regime of higher fees, where the [7-day moving average] is higher than the [180-day moving average], is historically a signal of market recovery,” the firm wrote on Twitter. It also shared a chart that shows how similar events have played out historically.

revenue chart
Source: Glassnode/via Twitter

By Tahlia Mauldon

As expert in digital marketing, Tahlia began working in the fintech sector in 2014 after writing her thesis on Bitcoin technology. Previously author for several international crypto-related magazines and CMO at X-tech. She is now the co-founder and editor-in-chief of The Cryptonomist. She is also a marketing teacher at Digital Coach in Davenport and she is writing a book about NFTs for the American publishing house, while she is also helping artists and company to entering in the sector.