The crypto market, which stood at a total capitalization of $1.192 trillion last week, has encountered a slight setback, losing 1.8% and settling within the $1.190–1.210 trillion range. As the market lingers near its lower boundary on Monday morning, investors brace themselves for a potential deeper correction.
The current state of the market can be largely attributed to the anticipation surrounding the upcoming decisions of three major central banks: the Federal Reserve, the European Central Bank (ECB), and the Bank of Japan. The announcements and comments from these institutions later this week are expected to finalize the market’s consolidation and set the tone for the coming weeks.
Bitcoin, the flagship cryptocurrency, has been testing the lower end of its range, currently trading at $29.8K. A closer examination reveals a discernible downtrend, with intermittent spells of weakness occurring at slightly lower levels. Despite this, bullish sentiment still persists, with investors continuing to buy back BTCUSD on dips below $29.7K.
However, analysts are cautioning market participants to be prepared for a potential drop in Bitcoin’s value to $28.9K. Such a move is considered a typical correction, representing 61.8% of the initial rise since mid-June and aligning with the 50-day moving average.
In the event that bearish pressure intensifies, the next substantial support level to watch out for is $27K. This price point marks the lower boundary of the rising channel from the November lows and coincides with the 200-week moving average.
The recent sentiments expressed by Spencer Schiff, a former BTC backer and son of prominent crypto critic Peter Schiff, have added to the uncertainty in the market. Schiff, who has become disillusioned with cryptocurrencies, predicts that Bitcoin’s value may eventually plummet to nearly zero. Instead, he believes the future lies with projects based on artificial intelligence.
Furthermore, regulatory developments in the United States could potentially impact the crypto industry. Republicans in the US House of Representatives have released a draft bill aimed at regulating the digital asset market, calling for the development of rules by the SEC and CFTC.
Amidst these developments, the closure of Coinbase’s Borrow lending program has also raised eyebrows in the market. The program allowed customers of the largest US exchange to borrow up to $1 million against their crypto assets, and its termination could have implications for market liquidity.
On a positive note, MicroStrategy co-founder Michael Saylor has expressed optimism about the role of cryptocurrencies in improving economies, specifically mentioning Argentina. Saylor believes that cryptocurrencies, especially Bitcoin, can play a significant role in Argentina’s economic recovery, particularly in the face of high inflation.