The short-term trend suggests that the sell-off by cryptocurrency traders has halted, as futures exchanges have recently witnessed a decline in selling pressure. HODLers have begun to accumulate coins alongside medium-term speculative investors.
Let’s take a look at some of the past week’s major events.
- Ethereum Foundation is removing all references to ETH 1.0 and ETH 2.0 in favor of calling the proof-of-work blockchain the “execution layer”, and the proof-of-stake chain, the “consensus layer.” The main rationale behind the rebranding is that ETH 2.0 failed to capture what was happening on the network through its series of upgrades and to avoid confusion.
- The Biden Administration is expected to issue an order that would enable governing agencies in the United States to conduct risk analysis on cryptocurrencies as a national security threat. The executive order would come out in the coming weeks, as the government entities will start to study digital assets, stablecoins and non-fungible tokens (NFTs) to create a new regulatory framework.
- A New York-based bank-Flushing Financial Corporation-with over $8 billion worth of assets under management has decided to offer Bitcoins services to its customers in partnership with New York Digital Investment Group (NYDIG).
- The US Securities & Exchange Commission (SEC) rejected Fidelity’s Bitcoin Trust exchange-traded fund (ETF) application.
- The International Monetary Fund (IMF) urged El Salvador to remove Bitcoin’s status as legal tender, stating that the leading cryptocurrency carried “large risks” related to financial stability, financial integrity and consumer protection.
Signs of a recovery nearing?
Bitcoin is on track to record its third consecutive month of losses, which hasn’t been seen since June 2021. If the leading cryptocurrency continues to lose bullish momentum, the coin would record its longest losing streak since early 2019.
While Bitcoin lost half of its value last week, a few metrics suggest that the leading cryptocurrency is in a bear market. Last week, the total sum of realized losses has exceeded $7.57 billion, a number in a similar ballpark seen previously during dips in the past 12 months.
The Net Unrealized Profit/Loss (NUPL) metric has signaled low profitability, suggesting that we are in the early to mid-phase of a bear market.
Short-term holders are mostly underwater, while currently in possession of 18.3% of the Bitcoin supply. While short-term holder supply is nearing multi-year lows, long-term holders have been unfazed by the recent crypto crash. Long-term holders are now holding the highest volume of supply held at a loss since March 2020.
Veteran trader Peter Brandt recently indicated that it could be a good time to get into the Bitcoin market. He stated that since the market sentiment has turned extremely bearish, the bellwether cryptocurrency is likely to recover and aim higher.
Bitcoin whales, investors who own over 1,000 BTC are now in strong accumulation, indicating that institutional money is now re-entering the crypto market.
Last week, crypto funds witnessed inflows of $14 million, suggesting that institutional investors are taking advantage of the recent price dip.
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