Could this be the silence before the storm on crypto market?
The market capitalization of the cryptocurrency market has once again fallen below $1 trillion, and the largest NFT exchange, OpenSea has recently registered record declines in tokens.
After several days of declines, cryptocurrencies have entered a two-day period of consolidation, with the strong dollar putting pressure on risky assets:
• Ethereum remains in a range between $1570 and $1,650, Bitcoin between $21,000 and $21,600. Cryptocurrencies have mostly left the sideways trend very abruptly, and the upcoming speech by Fed chief Jerome Powell on Friday could put pressure on traders;
• Most of the market fears Powell’s hawkish speech at the Jackson Hole conference could spook Wall Street. Despite the concerns, investors are still betting on a 50bp hike in September as more likely than a 75bp hike (56.5% vs. 43.5%). In addition, Powell may pull another ‘ace out of his sleeve’ and indicate a path for the QT asset reduction program, which hasn’t really gotten off the ground yet. Going forward, cryptocurrency bears may dominate ahead of the conference, and only strong demand could stop the declines;
• Kitco analysts point to a significant drop in the leveraged positions of Ethereum traders. Last week’s liquidations have once again ‘cleared the market’ for the second largest cryptocurrency, which is approaching a September transition to version 2.0 and a difficulty bomb that will ultimately make Ethereum a deflationary asset similar to Bitcoin;
• Decentraland cryptocurrency slipped to near fall 2021 levels, when a marketing announcement by Facebook CEO Mark Zuckerberg caused massive euphoria among Metaverse-related tokens;
• South America’s largest e-commerce company, Mercado Libre last week launched the MercadoCoin cryptocurrency, which is operated by Ripio. Ripio CEO Sebastian Serrano stressed that this is likely the beginning of a larger trend of adoption, tokenization and intergration of cryptocurrencies with South American economies;
• Cryptocurrency company Ripio, in partnership with Visa, will create 250,000 payment cards that support payments in Brazilian reales and the 28 cryptocurrencies that the platform makes available for trading. The cards will be made available in Brazil. Cardholders are expected to receive rewards paid in Bitcoin and possibly other cryptocurrencies, potentially encouraging customers to further adopt the service.
16% of American adults have confirmed investments in cryptocurrencies, and 72% have at least heard of them. At the same time, 46% are disappointed with the results of their investments, which paints a picture of resignation that has historically heralded a market resurgence.
Decentraland chart, H4 interval. The cryptocurrency has not been able to sustain gains and has once again settled below $1 and below the 71.6 Fibonacci retracement, which may encourage aggressive traders betting aggressively. At the same time, the number of daily users of the decentralized world built by Decentraland’s developers fell to just 1,000 per day, which may indicate that the valuation of the cryptocurrency traded in Decentraland’s ‘metaverse’ platform is still significantly overvalued.