Cryptoverse: Is the end of the bitcoin winter near?

May 24 (Reuters) – The crypto winter is in its ninth week and bitcoin can not shake the freezes.

From technical to trading, market indicators flash red or yellow for the largest cryptocurrency, which has lost a third of its value in just two months.

So what now?

Bitcoin’s limited history is not much of a guide to cryptocurrencies, which we define as prolonged bearishness for a month or more.

There have been five since 2017 and three since 2021. Last year’s two crashes lasted for 14 and 10 weeks and led to bitcoin losing 45% to 47%. If they were typical, bitcoin’s recent fall – 36% loss in eight weeks – has a way to run again.

“Bitcoin is simply not attractive to retail investors right now. No one really sees the potential for bitcoin to issue 10 times (return),” said Joseph Edwards, head of financial strategy at fund management firm Solrise Finance.

The macro background is in fact far from supportive of an asset class that is now seen as volatile, risky – plus vulnerable in the face of inflation. Since concerns about rising global exchange rates and geopolitics bring US equities (.SPX) close to confirming a bear market, cryptocurrencies are not on anyone’s trading list.

But even in the icy wilderness, there are some signs that the crypto king is planning his comeback.

Bitcoin draws strength from the rest of the crypto market, for example, its relative status provides some comfort for investors fleeing altcoins as stablecoins that are considered extremely risky after the collapse of TerraUSD in early May.

Bitcoin dominance, a measure of the relationship between market value and the rest of the cryptocurrency markets, has jumped to a seven-month high of over 44% even though the price has fallen.

“Institutional investors in particular are fleeing to some extent in security to bitcoin, which has the most institutional adoption,” said Marcus Sotiriou, an analyst at UK real estate firm GlobalBlock.

Last week, bitcoin futures saw its largest net long position since the contract was launched in 2018, CFTC data showed, indicating that traders are increasing their positioning for an increase in the price of the cryptocurrency.

FEAR AND GREED

But scary times.

Bitcoin has lost half its value since a November 10 peak of $ 69,000. This week, it flirts with $ 30,000, after reaching a low of 17,401 dollars in 17 months on May 12. It is still the largest digital asset by market value, but the market value of all cryptocurrencies is now $ 1.3 trillion, less than half of $ 3. a trillion peak in November.

The computer platform Coinglass’s bitcoin Fear & Greed index for market sentiment – where 0 indicates extreme fear and 100 extreme greed – hovers at 13.

Ether, the No. 2 token by market value, has soared near the $ 2000 mark, down about 60% from a peak of $ 4868 on November 10.

Bilal Hafeez, CEO of research firm Macro Hive, pointed to $ 2300 and $ 2500 as key levels and warned that not staying above any of these brands in the short term would be a bearish signal.

The crypto market is cowed.

Total spot market volume for all cryptocurrencies on major stock exchanges had fallen to $ 18.4 billion as of Monday – less than half of the $ 48.2 billion seen on May 14, which was the highest volume for 2022, according to news and research site The Block .

Blockchain research firm Glassnode said on May 9 that $ 33,600 bitcoin puts 40% of investors under water on their holdings.

“Many people are wondering what to do with their coins – continue to hold on to your life or book loss and move on?” said Lindsey Bell, marketing and money strategist at Ally Invest.

“It’s a good reminder that crypto should probably not be more than, say, 1-2% of your portfolio.”

Reporting by Medha Singh and Lisa Pauline Mattackal in Bengaluru Editing Vidya Ranganathan and Pravin Char

Our standards: Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which under the principles of trust is committed to integrity, independence and freedom from bias.