Cryptocurrencies are on track to complete a bullish week which have been few and far apart so far this year. Over the past 5 days the price of Bitcoin has increased by 11.57%, Ethereum by 13.41%, Bitcoin Cash by 2.88%, and Dogecoin by 2.80%. Some of these figures seem to indicate a strong bullish trend but traders should take into consideration the volatility of the cryptocurrency market.
The price movement over the past week has actually not formed much more than a medium-term retracement. This also applies to Ethereum which has increased by over 13%. The value of the cryptocurrency market has decreased by up to 73% since November of last year, and has formed 3 major retracements including the current week. Cryptocurrency traders will be monitoring the price movement to determine whether the climb will continue to form a medium-to-longer term bullish trend. However, so far the price movement has only formed a 28% retracement compared to the most recent bearish price swing.
Economists are contemplating as to what has driven the price to increase and influenced traders to return to the cryptocurrency market. Currently, the picture has not changed in terms of the risks of recession nor the strong interest rate hikes over the coming months. This has been the major force, influencing sellers over the past months.
One possibility for the renewed crypto enthusiasm is that traders are entering the market for technical reasons. The price had been massively discounted for a while and investors may be trying to take advantage of the lower price. Currently the total crypto market capitalization has reached $970 billion, and Bitcoin’s share has slightly increased to 43.3%.
According to Bank Of America's latest report on the market, the number of active users has decreased by half from 1 million users in November of last year, to approximately 500,000 this month. Furthermore, if a recession does materialize, it could further pressure the price of cryptocurrencies as the risk appetite and investor confidence continues to decline.
Another issue has been the cryptocurrency market’s liquidity crisis. The Singapore cryptocurrency hedge fund known as ‘Three Arrows Capital’ was discontinued, and the broker Voyager Digital, which served almost 100,000 clients, also announced its liquidation. Meanwhile other companies have temporarily suspended withdrawals due to extreme market conditions and high volatility.
However, even while taking the above into consideration, throughout the week we can see that the price has declined, and it is, without a doubt, not the first time that the cryptocurrency market has seen strong declines. Investors have waited for the market to bottom out, before purchasing and pushing the market higher again, on many occasions over the past few years.
Copyright © 2022 – All rights reserved.
NAGA is a trademark of The NAGA Group AG, a German based FinTech company publicly listed on the Frankfurt Stock Exchange | WKN: A161NR | ISIN: DE000A161NR7.
Any trademarks appearing on this website are the property of their respective owners.
The NAGA Group AG is the holding company of various companies, such as NAGA GLOBAL LLC, NAGA MARKETS EUROPE LTD, NAGA Technology GmbH, NAGA Pay GmbH and has a close link with NAGAX Europe OÜ.
RISK WARNING: Derivatives are complex instruments and come with a high risk of losing money rapidly due to leverage. A high percentage of retail investor accounts lose money when trading derivatives with this provider. You should consider whether you understand how derivatives work and whether you can afford to take the high risk of losing your money.
Trading with NAGA Trader by following and/or copying or replicating the trades of other traders involves high levels of risks, even when following and/or copying or replicating the top-performing traders. Such risks include the risk that you may be following/copying the trading decisions of possibly inexperienced/unprofessional traders, or traders whose ultimate purpose or intention, or financial status may differ from yours. Before making an investment decision, you should rely on your own assessment of the person making the trading decisions and the terms of all the legal documentation.
Restricted countries: NAGA Group AG does not provide services for the residents of certain countries, such as Afghanistan, Albania, American Samoa, Australia, Barbados, Belgium, British Virgin Islands, Burkina Faso, Cambodia, Canada (including Quebec), Cayman Islands, Central African Republic, Congo, Democratic People's Republic of Korea, Democratic Republic of the Congo, Gibraltar, Guam, Haiti, Iran, Iraq, Isle of Man, Israel, Jamaica, Jordan, Libyan Arab Jamahiriya, Mali, Monaco, Morocco, Myanmar, Nicaragua, Philippines, Russian Federation, San Marino, Senegal, Serbia, Somalia, South Sudan, Sri Lanka, Syrian Arab Republic, Trinidad and Tobago, Tunisia, Turkey, Uganda, Ukraine, United Kingdom, US Minor Islands, US Virgin Islands, USA, Vanuatu, Yemen, Zimbabwe.