As encouraging as the cryptocurrency market comeback has been, bulls appear to have little faith in it as fears of further fallout from the recent negative developments continues to fuel caution and broad risk-off sentiment.
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Over the past 24 hours, the market has had some upward traction to recover from the weekend’s losses after a week of hell where over a trillion dollars were wiped off the value of the crypto market cap.
It is hard to say whether the rebound is sustainable given the lack of direction and momentum as the buy volumes are still trailing, and any peaks are sharply sold off by bears who have lined up along the resistance levels.
Much of the bounce , as seen in the small size of transactions, is being driven by retail traders and speculators who are continuing the high level of engagement that began since early 2021, and new entrants who may be hoping to jump in and ride the explosive uptrend seen in some of the cryptocurrencies over the past months.
However, investors and traders are growing increasingly nervous amid souring mood and negative outlook that may open up a long-lasting downward spiral, adding to the challenges facing digital asset holders in the market that has lost almost half of its capitalisation in the past week.
However, multiple attempts upwards were sold off and eventually bulls lost the strength to push higher.
Subdued buy orders are also likely linked to the tightened liquidity on crypto exchanges due to the uncertainty – gearing and leveraging by the traders – they borrow more when prices surge as exchanges are willing to provide but when prices start drop they face the margin requirement to top off their account with cash to avoid liquidation .
Looking at the past price movements of bitcoin shows the keen recovery from Monday afternoon initially provided the much needed lift for the digital coin to surge up towards US $40,000 where it met some serious resistance that slowed the uptrend.
Despite rejected at this level, the subsequent downtrend has not been that intense and was still trading just below US $39,000 at press time.
There is pretty strong support around the US $35,000 mark and further down at US $32,000 if the current hovering reinstated downtrend.
The entire cryptocurrency market has almost been closely moving in lockstep with bitcoin throughout the past several days and they also appear to be running out of steam.
As of press time, in the Top 10 big caps, Bitcoin (BTC) is changing virtual hands at US $38,380, Ether (ETH) at US $2,520, ripple (XRP) at US $0.96, Binance Coin (BNB) US $353, cardano (ADA) at US $1.57, Dogecoin (DOGE) at US $0.34, ChainLink (Link) at US $26, UniSwap (UNI) at US $25, Polkadot (DOT) at US $22.50 and Stellar (XML) at US $0.43.
At this point although most major coins are facing the resistance where sellers have lined up, slowing further ascent, positive traction is still possible if strong consolidation at the current levels persist, and if there is some good news to cheer bulls.