The crypto market is performing triage this morning after a brutal Monday that saw double digit losses across the board and watched the total market capitalization for the sector fall below $1 trillion for the first time since 2020.
As of this writing, bitcoin is sitting at $22,019, down 1.51% over the past 24 hours. Ether is down 0.54%, currently priced at $1,209.00.
Major altcoins are bouncing back today, led by cardano, polkadot, and solana, up 6.75%, 4.43%, and 3.06% respectively.
TRX, the native token of the multipurpose Tron blockchain, remains down 7.57% over the past 24 hours, and has fallen 27% over the past five days. Its decline comes in the midst of an aggressive defense of the token led by Tron founder Justin Sun and the TRON DAO, a collective managing a multi-billion dollar treasury being used to prop up a carbon-copy stablecoin, USDD, of the failed TerraUSD that collapsed in May.
Looking further out, these tokens are still down by 20-30% over the past five days and between 50-85% year to date. Ironically, the lone exception is Tron which briefly surged in early May amid the hype of USDD’s launch, but has since given up those gains.
Focus now turns to identifying when, or if, we have reached the bottom of the market. Current technical charts suggest that the market is flashing oversold signals. Bitcoin’s Relative Strength Index, Stochastic Indicators, and Bollinger Bands suggest that a short-term correction is in the cards.
It also appears that after some multi-billion liquidations, activity in the derivatives market is calming down. Raghu Yarlagadda, CEO of prime broker FalconX told Forbes that “Leverage in the derivatives markets is definitely not as high as it was before. This is a good sign because it means that people are not taking over levered bets.” Yarlagadda noted that many institutions on his platform are preferring to use market-neutral strategies for the time being because they are uncertain of the market’s future direction.
However, despite this lull and perhaps a brief turn to the upside, we are unlikely to break the long-term bearish trend being seen across all crypto and other risk-on assets. Additionally, bitcoin has broken through prior support levels this year in response to major market developments such as the LUNA/UST crash in early May or the drop in January when the Fed announced that it was going to start curtailing its accommodative policy stance.
The next data point to look for will be the readout from the Fed’s next policy meeting, happening today and tomorrow, where it is expected to signal its next rate increase of 50-75 bps.