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Investor sentiment is strengthening, indicating a likely trend reversal.

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Data from the derivatives market is hitting the mark. Investor confidence is picking up since the bottom has been reached due to all the recent volatility. Money is being invested again in the crypto market.

According to figures, total crypto market capitalization was up 10% to reach a figure of $1.69 trillion. This means that it is 25% higher than the lows on January 24th, 2022. It is a tad early to assume that the market reached rock bottom. Two critical indicators, the CME futures basis and the Tether/CNY premium, have turned bullish. This is a good indicator and signal that investors are positive and back up price recovery seen currently.

By no means should traders assume that the bear trend is over by taking a look at price charts. Even with all the current happenings, bears have good reason to think that the 3-month long descent and channel formation is not over. The February 4th rally could reflect negative macro-economic data, which was a good bit below the 5.1% expected by the market.

Market analyst Lyn Alden recently said that the US Federal Reserve may put off announcing a hike in interest rates after the US employment data was released on February 2nd. The data was disappointing and over 300,000 jobs were lost in the private sector. These numbers were the worst since March 2020.

To prove the premise that crypto markets have improved, it is suggested that traders look at CME’s Bitcoin futures contract premium. It is a red flag when the indicator becomes negative. Even though the CNY/Tether premium indicates a shift in trend, it is a constant reminder to investors to distrust Bitcoin’s capacity to stay a tool against inflationary hedging.

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