The dominant crypto, Bitcoin, has had many market players in sorrow this year. The digital coin remained in a range since 2022 started, peaking near the $48,000 mark. The crypto market seemed unstoppable in November 2021. However, things changed following a crash that had BTC losing half of its value in less than three months.
Such developments had investors extremely cautious of the entire crypto space. Can the market recover from here or another possible drop? There was hope almost one month ago when BTC kick-started recovery, closing into the $48,000 and $50,000. Alas, BTC fell as swift as it surged.
Speculation Injuring the Market
What contributed to this decline? Was it speculations or faded fundamentals? Data appears to show suppositions contributed to BTC struggles. The recent Glassnode’s uncharted 13 reports analyzed the potential cause.
The ratio of off-chain and on-chain volume (spot and futures volume) indicated that BTC’s price movements reflect speculations on crypto exchanges. Regardless of BTC’s strong fundamentals, exogenous factors happening on cryptocurrency exchange contribute to the price action and not occurrences on the blockchain.
Nothing Extraordinary
Meanwhile, the concern remains regarding the outflows BTC sees at the moment. The broad crypto market witnessed fund outflows worth $134 million, accounting for the 2nd highest weekly outflows this year. That matches the trend visible in US equities and fixed income assets. However, experts attribute that to the US Fed’s hawkish stance amid surging inflation.
The US dollar gained momentum and may see more strength with more funds moving out of the risky markets.
However, outflows aren’t visible on all assets in the cryptocurrency industry. Solana (SOL) received about $3.7 million worth of inflows. Moreover, the alt market registered $5M in inflows. Lastly, Bitcoin lost a whopping $131M in outflows.
Technically, BTC fluctuated around the critical support floor at $39,000 – $41,000. Bitcoin traded at $40,424.14 at this publication, dropping 0.12% over the past day. Enthusiasts can expect BTC to continue the accumulation phase until massive tailwind updates trigger new rallies. However, BTC should overcome the $52,000 – $54,000 range for meaningful upticks.
