Is the crypto bear market over? Here’s what to watch.
Bitcoin and ether are on track to record their best month since last October, prompting some investors to wonder if the crypto bear market is over.
The #1 cryptocurrency BTCUSD,
Friday hit a high of $24,412, the highest level since June 13, according to data from CoinDesk. Bitcoin is up over 19% so far this month, while Ether ETHUSD,
jumped more than 50%.
Still, bitcoin and ether are respectively trading down 65% from their highs of last year.
Despite recent gains, “market data continues to show traders are conservatively positioned,” NYDIG analysts wrote in a Friday note.
Open interest in bitcoin futures and options, which measures total outstanding derivatives contracts, stands out from recent lows but remains well below record highs, NYDIG analysts noted. Funding rates for perpetual swaps also remain mostly neutral, according to data from Coinglass. A positive funding rate is generally considered bullish because investors are willing to pay long, while a negative funding rate is generally a bearish sign.
“The fact that funding rates are still low on an absolute basis indicates a lack of desire among traders to take directional bets, although they appear to be trending higher,” the analysts wrote.
From a technical standpoint, it’s important to watch whether, by the end of this week, bitcoin could trade above its 200-week moving average, which currently sits at $22,800. noted Will Clemente, analyst at Blockware Solutions.
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Overall, the macroeconomic environment still plays the most important role, analysts noted. “Unsurprisingly, this whole year will be dominated by the Fed and what it’s going to do,” said Ben McMillan, founder and chief investment officer at IDX Digital Assets.
The stock and crypto market rallied this week after the Federal Reserve raised its benchmark interest rate by 75 basis points, and Fed Chairman Jerome Powell said that while another rise in rate of the same magnitude in September was possible, the decision would depend on forthcoming economic data. . Some traders saw prospects for the Fed to slow the pace of rate hikes, while others believe such expectations may be premature.
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