Crypto

What prevents the start of the cryptocurrency rally: expert opinion

While there was a lull in the US stock and bond market due to the Labor Day holiday, the cryptocurrency market noted a sharp decline. In particular, BTC and other digital assets came under pressure on Monday, writes Barron’s.

If last Friday Bitcoin managed to rise above the $20,300 mark, then on Monday it collapsed again to $19,700.

Bitcoin is trading below the key $20,000 level, meaning it has moved out of the $20,000 to $25,000 range that it has been in for most of the summer after breaking off the $30,000 level.

As Craig Erlam, an analyst at brokerage Oanda, noted, BTC is still showing resilience around $20,000, but this is being tested as the market is once again swept by a wave of risk aversion. A significant break at this point could be devastating as the next key level lower for Bitcoin will be the June lows around $17,500.

And Naeem Aslam, an analyst at the broker AveTrade, notes 2 factors that, in general, do not contribute to the rally of cryptocurrencies in the short term.

“BTC’s daily range has narrowed a lot, indicating that a massive capitulation is coming, which could happen any day.”

BTC has been able to avoid the sell-off that has hit the stock market in recent weeks. Cryptocurrencies should theoretically trade as non-equity correlated assets, but it has already been proven to be associated with fluctuations in other risk-sensitive assets, especially stocks.

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The second factor is the ongoing decline in the foreign exchange market, where most of the major currencies lost sharply to the USD index, which measures the dollar against a basket of 6 peer currencies: it rose by 14% this year and another 0.2% on Monday .

And although the bulls are holding on to their positions very well, not allowing bitcoin to fall, if there is a capitulation before the fall, then the next step will not be near the level of $18,000 or $15,000, but much lower, around $12,000.

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