After two months of consolidation, is the bull market about to resume? From Moneyweb.
Optimism may be gradually returning to the crypto markets after May’s frightful drop from all-time highs, according to the latest Kraken Intelligence report.
June marked the second month of range-bound trading for bitcoin (BTC) as the bulls and bears battled for control between $30 000 and $42 000. BTC retreated 50% from its April high of $65 000.
Despite slipping to a five-month low of $28 816, a modest rally in the last week of June rescued what might have been a disastrous month for BTC, which ended the month just 6% down on the start.Read: Crypto firms fight for top talent with hundreds of openings
“The BTC bulls successfully defended $30 000 support on several occasions in June, but such doesn’t rule out the possibility of a drift lower in the month(s) ahead,” says Kraken Intelligence.
“Headlines out of China [imposing bans on bitcoin mining] spooked the market in May and June, making newcomers fearfully question what impact the second-largest economy could have on crypto assets.
“But when looking back as far as 2013, one will find that negative headlines out of China only temporarily weigh on the market.”
BTC volatility hit a peak in June, notwithstanding a 36% drop in trading volumes. Volatility has since started to cool off.
BTC’s share of the crypto market slipped to 39.6% in May, but later recovered to 48.3% as market participants cycled back into BTC in the face of a market-wide sell-off.
Ethereum’s (ETH) slump was even more dramatic, trading down from a May high of more than $4 000 to $1 700, a drop of 58%. The price has since recovered to $2 300. The number of r/Ethereum subreddit subscribers surpassed the one million mark, signalling growing interest and adoption of the second-largest crypto asset by market cap.
‘Gas’ fees, or the price of transacting on the Ethereum network, dropped 97% between May and June due to the rollout of infrastructure upgrades and lower demand for network usage (such as for decentralised finance, non-fungible tokens, or NFTs, and decentralised exchanges).
Cardano (ADA) outperformed many of its peers in June, despite dropping 20%, in part due to the realisation of the long-held promise of delivering smart contracts (contracts that are executed by software rather than intermediaries and lawyers).
Overall, June was a month of market-wide derisking, prompting market participants to flock to BTC, the crypto market’s safe haven asset, says Kraken Intelligence.
After two months in the doldrums, NFTs stole the spotlight in June as the best performing sector with a 13% loss, the smallest loss of all crypto assets for the month. Kraken says this outperformance is explained by celebrity adoption, capital investment and ongoing innovation.
Bitcoin still has some ‘fear factor’
Though there has been some recovery in the BTC price, it still remains in the ‘Fear’ zone, according to Kraken Intelligence, while the accompanying market dominance chart shows BTC hovering around 50% of the total crypto market in terms of market cap.
China may have gone frosty on cryptos, but El Salvador has granted it legal tender status, Mexico is looking at broader adoption, and the Indian government is reportedly looking at classifying BTC as an asset class, moving away from its initial plan to impose an outright ban on private crypto.
MicroStrategy, whose CEO Michael Saylor has championed BTC, completed its $500 million offering of secured notes due in 2028 at an annual interest rate of 6.125%. The company says it plans to sell up to $1 billion in stock to buy even more BTC.