The crypto winter is into its ninth week and bitcoin can't shake the chills.
From technicals to turnover, market indicators are flashing red or amber for the biggest cryptocurrency, which has lost a third of its value in just two months.
So what now?
Bitcoin's limited history isn't much of a guide on crypto winters, which we're defining as prolonged bearishness for a month or more.
There have been five since 2017 and three since 2021. Last year's two crashes lasted 14 and 10 weeks and caused bitcoin to lose 45% to 47%. If they were typical, bitcoin's latest drop - 36% shed in eight weeks - has road left to run.
"Bitcoin is just not attractive to retail investors right now. Nobody really sees that potential for bitcoin to give out 10 times (return)," said Joseph Edwards, head of financial strategy at fund management firm Solrise Finance.
Indeed the macro background is far from supportive for an asset class now firmly seen as volatile, risky - plus vulnerable in the face of inflation. As worries over rising global rates and geopolitics bring U.S. stocks (.SPX) close to confirming a bear market, cryptocurrencies aren't on anyone's shopping list.
Yet even in the icy wilderness, there are some signs that the crypto king is plotting its comeback.
Bitcoin is drawing strength from the rest of the crypto market, for example, its relative stature providing some comfort for investors fleeing altcoins such as stablecoins deemed ultra-risky after the collapse of TerraUSD in early May.
Bitcoin dominance, a measure of the ratio between its market cap to the rest of cryptocurrency markets, has jumped to a seven-month high of over 44% even as its price has decreased.
"Institutional investors particularly are fleeing to safety, to a certain extent, to bitcoin, which has the most institutional adoption," said Marcus Sotiriou, analyst at UK-based asset broker GlobalBlock.
Last week, bitcoin futures saw their largest net long position since the contract was launched in 2018, CFTC data showed, indicating traders are increasing positioning for a rise in the price of the cryptocurrency.
Scary times, though.
Bitcoin has lost half its value since a Nov. 10 peak of $69,000. This week, it is flirting with $30,000, after touching a 17-month low of $25,401 on May 12. It remains the largest digital asset by market cap, but the market value of all cryptocurrencies now stands at $1.3 trillion, less than half the $3 trillion peak in November.
Data platform Coinglass's bitcoin Fear & Greed index of market sentiment - where 0 indicates extreme fear and 100 extreme greed - is hovering at 13.
Ether , the No. 2 token by market value, has hovered near the $2,000 mark, and is down about 60% from a peak of $4,868 on Nov. 10.
Bilal Hafeez, CEO at research firm Macro Hive, pointed to $2,300 and $2,500 as key levels and warned that failure to hold above either of those marks in the near term would be a bearish signal.
The crypto market is cowed.
Total spot market volume for all cryptocurrencies at major 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 analytics firm Glassnode said on May 9 that bitcoin at $33,600 puts 40% of investors underwater on their holdings.
"Many folks are left wondering what they should do with their coins – keep holding on for dear life or book losses and move on?" said Lindsey Bell, chief markets and money strategist at Ally Invest.
"It's a good reminder that crypto probably shouldn't be more than, say, 1-2% of your portfolio."
I don't think it's unreasonable to see this whole thing as either a tempest in a tea pot, or the wrangling of some big players to consolidate power, and to dominate the marketplace - to pick a winner and crown it King of Crypto.
Paranoid Mike's main worry though is that whoever is driving this shit could easily be angling for a takeover - looking to squeeze meatspace money out and replace it with this other cyber thing.
If disruption is all the rage, what better way to disrupt pretty much the whole world than to fuck up the money structure - the whole system of debit & credit?
And if you remove the old players (Dollars, Pounds, Euros, Yuan, etc) then you've removed a very important system of boundaries - the things that help us decide where one country stops and another begins. Borders.
Reminiscent of the Ned Beatty character's speech in Network.
And then, along comes Christine Lagarde to defend the current regime.
Crypto assets are ‘worth nothing,’ says ECB’s Christine Lagarde
ECB president also signals preference for interest-rate hike of 25 basis points in July
FRANKFURT — European Central Bank President Christine Lagarde is making no bones about her feelings toward the value of crypto assets — namely, there isn't any.
"I have said all along the crypto assets are highly speculative, very risky assets," Lagarde told Dutch television show College Tour in an interview to be aired on Sunday. "My very humble assessment is that it is worth nothing. It is based on nothing, there is no underlying assets to act as an anchor of safety."
The comments come as the crypto market, more broadly, is taking a beating. Earlier this month, Bitcoin lost 20 percent of its value in a single week.
Lagarde revealed she had never invested in crypto assets, but her son had — with little luck.
A digital euro, however, would be an entirely different ball game, Lagarde explained.
"The day when we have the central bank digital currency, any digital euro, I will guarantee it," she said. "So the central bank will be behind it. I think that is vastly different from any of those things."
Lagarde also addressed monetary policy, signaling again that the ECB is ready to hike interest rates in July to fight raging inflation in the eurozone. However, she appeared to downplay the chance of a 50 basis-point move — a more radical option that Dutch central bank chief Klaas Knot had recently floated. Current market expectations see a 25 basis-point increase.
"We are going to follow the path of stopping net [bond] purchases and then sometime after that — which could be a few weeks — hike interest rates," Lagarde said. ECB bond buys are currently expected to be phased out early in the third quarter, opening the door for a rate hike in July.
A 50 basis-point hike "is not something that I can tell you at this point here today," she added.
Instead, she signaled that she may favor a slower tightening path, cautioning that the ECB doesn't want to put the brakes on a "car that is moving." Its goal is to "lift the accelerator ... to slow inflation."
Who do you trust?
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