The crypto market fell on Tuesday ahead of a US inflation report for June that is feared to show that consumer prices have continued to rise at a faster pace despite interest rate hikes. Meanwhile, more on-chain signs are now indicating that a bottom for bitcoin (BTC) could be about to form.
As of Tuesday at 11:20 UTC, bitcoin stood at USD 19,672, down 4% for the day and 3% for the week, after falling below the key USD 20,000 level in early European trading. At the same time, ethereum (ETH) traded at USD 1,065, down 7% for the day and 8% for the week.
The moves happened ahead of the release of June inflation figures in the US on Wednesday, with expectations being that inflation will have increased even further from 8.6% annually in May.
Fears that inflation will come in higher increased on Monday, when White House spokesperson Karine Jean-Pierre said she expects inflation to be “highly elevated.” According to a Bloomberg estimate, the headline inflation number for June is expected to come in at 8.8% annually.
“Bitcoin remains in a tight trading range,” which has “left traders scratching their heads as to when the next meaningful move to the upside or downside will be in the largest cryptocurrency,” Nick Heale, Head of Corporate Advisory at crypto broker GlobalBlock, wrote in an emailed commentary on Tuesday.
Heale further said that the week will be “crucial” for all financial markets with inflation numbers coming out on Wednesday. “Bulls will be hoping for some relief in the measure, due to evidence that commodity prices could finally be coming down,” Heale said, warning that “this may take some time to play out.”
Meanwhile, new data from the crypto research and investment firm CoinShares showed that flows into short-bitcoin investment products fell last week compared to the week before.
According to the latest data, short-bitcoin inflows stood at USD 6.3m last week, down significantly from USD 51.4m one week earlier, when the first short-bitcoin exchange-traded fund (ETF) had just launched in the US. In either case, BTC saw minor outflows totaling USD 1.7m.
Writing in a market update on Tuesday, the Singapore-based crypto trading firm QCP Capital said that crypto prices have remained capped to the upside “as expected.” They explained that an additional reason it sees for limited upside going forward is news about a planned pay-out of BTC by the collapsed crypto exchange Mt. Gox.
“It is impossible to be certain about the exact impact, given the numerous cross-arguments and theories surrounding the release. Our main takeaway is that there is a high chance of BTC supply flooding the market soon,” the firm wrote.
It added that “additional selling pressure on BTC and perhaps the outperformance of ETH and [altcoins] against BTC” could be possible as a result of the Mt. Gox situation.
Looking at the bitcoin market from an on-chain perspective, the crypto analytics firm Glassnode wrote in its latest report from Monday that many signals are suggesting that “a widespread capitulation has taken place.”
Additionally, the firm pointed to “miner capitulation” as another sign that the current price resembles major lows earlier in BTC’s history.
Using a model that combined the so-called Puell Multiple, a measure of aggregate miner income in USD, and the difficulty level of Bitcoin mining, the report said that although miner capitulation is underway, the process could take a few more months to play out.
“[…] the next quarter is likely to remain at risk of further distribution [from miners] unless coin prices recover meaningfully,” the report said. Lastly, crypto exchange in its on-chain digest for July summarized that the crypto space continues to experience headwinds due to the still-unresolved situation around major crypto firms like Celsius (CEL), BlockFi, and Voyager. It added that many on-chain indicators for BTC have continued to signal “oversold conditions while BTC struggles to break back into neutral territory.” Should these indocators move back into neutral territory, it “could suggest network demand is returning,” Kraken wrote. “We continue to expect choppy price action this month, but volatility will most likely increase leading up to the [Federal Open Market Committee, a committee within the US Federal Reserve System,] meeting near the month’s end. More strong bidding around the [USD 17,000] level, if bitcoin falls there again, will be a strong signal for the bulls and may indicate the formation of a potential bottom around that price,” Joe DiPasquale, CEO of crypto fund manager BitBull Capital, said in an emailed comment today.
“[…] the next quarter is likely to remain at risk of further distribution [from miners] unless coin prices recover meaningfully,” the report said.
Lastly, crypto exchange in its on-chain digest for July summarized that the crypto space continues to experience headwinds due to the still-unresolved situation around major crypto firms like Celsius (CEL), BlockFi, and Voyager.
It added that many on-chain indicators for BTC have continued to signal “oversold conditions while BTC struggles to break back into neutral territory.” Should these indocators move back into neutral territory, it “could suggest network demand is returning,” Kraken wrote.
“We continue to expect choppy price action this month, but volatility will most likely increase leading up to the [Federal Open Market Committee, a committee within the US Federal Reserve System,] meeting near the month’s end. More strong bidding around the [USD 17,000] level, if bitcoin falls there again, will be a strong signal for the bulls and may indicate the formation of a potential bottom around that price,” Joe DiPasquale, CEO of crypto fund manager BitBull Capital, said in an emailed comment today.
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