Crypto Analytic Company Glassnode Explains The State Of Bitcoin. More Bearish To Come?
Last week we just saw the Fed raise the interest rate by 75 bp. Which causes even more uncertainty in the market. Since then Bitcoin has drop below $19k but rebounded a little bit before hovering around the $19k price. At the time of writing, Bitcoin is priced at $18,872.
Glassnode stated that “bearish momentum coupled with increase risk” implies that more drops and uncertainty in the market is to come.
Bitcoin To Face More Bearish Market
Bitcoin tends to underperform before the FOMC meetings, which Glassnode stated that this happened usually around 8-10 days before the meeting. The trend happened in May, June and July of this year as well.
The data showed that the downward trends resembles the May 2021 crash which sat at a 53% retrace and extended for 3 months. The hike rate also seems to make the market less confident and predicts a volatile market in the near future.
“The futures-to-spot volume ratio is well below 1, and since the 50bps surprise rate hike in June, it has trended downward steadily. This development indicates less confidence and speculation in the system”
Although there is an increase in trading volume, the futures market showed holders are inclined to sell. And should expect more pain for Bitcoin holders in the near future.
“Bitcoin likely continues to trade in the $17-$25k trading range. Even though the spot market saw an uptick in traded volume, the options and futures market denoted selling pressure amidst a high-risk and bearish regime.”
Glassnode ended that, the slowing of the economy will prolong the potential of a bull run right now. It will be hard for the crypto market to trend upwards right now.
“From a futures market perspective, the muted funding rates since the beginning of 2022 reflected the level of uncertainty in the market (Figure 11). With another vague and ambiguous message from J Powell and an increasingly sluggish, slowing economy, the futures open interest rate of change has turned negative. This further delays any potential trend reversal.”
It seems like, Glassnode believe that the market will continue in a sideways trend for a while. Bitcoin looks like it will oscillates between $17k to $25k due to the slow down of the economy.