As a seasoned crypto investor with a background in financial analysis, I’ve witnessed numerous market fluctuations over the years. Tuesday’s sudden sell-off in the cryptocurrency market was a stark reminder of the unpredictable nature of this asset class. The market uncertainty ahead of the US CPI data release weighed heavily on Bitcoin and other major altcoins, including Cardano (ADA), Dogwifhat (WIF), and Notcoin (NOT).
On Tuesday, Bitcoin led a sudden drop in the cryptocurrency market, decreasing by 3.8%. This price decline may have been triggered by anticipation and anxiety surrounding the upcoming UP CPI data release on Wednesday, which could potentially bring uncertainty to the market.
As an analyst, I would interpret higher-than-projected Consumer Price Index (CPI) numbers as a sign of escalating inflation. This trend could prompt the Federal Reserve to hike interest rates. With higher borrowing costs, investors may shy away from riskier assets such as Bitcoin and other cryptocurrencies due to reduced liquidity.
In his latest study, James Van Straten, the Lead Analyst at Cryptoslate, identified a substantial Bitcoin sale worth more than $200 million that predominantly occurred on Binance. He pointed out that Bitcoin typically experiences a price drop before the Federal Open Market Committee (FOMC) and Consumer Price Index (CPI) announcements due to market sensitivity and exaggerated reactions, followed by potential price recovery post-events.
This morning, there was a surge in spot buying, predominantly driven by Binance with over $200 million involved. The price of #Bitcoin typically dips ahead of Federal Open Market Committee (FOMC) meetings and Consumer Price Index (CPI) reports, which may be overreactions from the market. Following these events, the Bitcoin price trend is expected to reverse.
The current level of open interest has reached its peak in the past 18 months, concurrently with funding rates sitting at 10%. This setup could indicate the possibility of a short squeeze.
— James Van Straten (@jvs_btc) June 11, 2024
As a crypto investor, I’ve noticed that open interest has reached an 18-month peak and currently stands at a 10% funding rate. This could be a sign of an impending short squeeze.
As an analyst, I’ve observed the crypto market remaining stagnant for the past three weeks. However, a surge in sell-offs could potentially lead to significant drops in altcoins like Cardano (ADA), Dogecoin (WIF), and Notcoin (NOT).
1) Cardano (ADA)
The digital currency representing the native value of the Cardano platform, referred to as ADA, has exhibited sideways trading behavior over the last two months. Amidst the overall market compression, this coin’s price oscillated between two converging trendlines, hinting at a symmetrical triangle pattern formation.
On June 8th, the price of ADA dropped below the support line of its triangle pattern, signaling that sellers were regaining control and potentially renewing bearish trends. Following this breakthrough, ADA declined by approximately 5%, reaching a value of $0.42. The market capitalization also saw a corresponding decrease, now standing at around $15.35 billion.
If the US CPI data causes the market to respond unfavorably, the price of Cardano may continue its downward correction towards $0.34.
In simpler terms, when the ADA price is lower than its daily moving averages of 20, 50, 100, and 200, it implies that the path of least resistance for the market has been downward in the past.
2)Dogwifhat (WIF)
The memcoin Dogwifhat (WIF) is built on the Solana blockchain and sports a Shiba Inu dog donning a pink hat as its symbol. Despite the overall market downturn, WIF’s price has continued to climb using an upward sloping trendline of support over the medium term.
The vigorous buying activity is causing WIF‘s price to form higher lows in its daily chart, suggesting that investors are actively purchasing this asset during market downturns. However, this memecoin experienced a significant correction over the past two weeks, dropping from a peak of $4.08 to $2.62, representing a 35.6% decrease in value.
The current market value of Dogwifhat coins amounts to $2.62 billion, and their trading volume during the past 24 hours experienced a surge of 21%, reaching a total of $460.1 million. This significant increase helped counteract the descending price trend.
As a crypto investor, I’ve noticed that the WIF coin has been experiencing consistent selling pressure. This could put the coin at risk of breaking through the support level mentioned earlier, leading to a significant trend reversal. If this happens, we might see the price fall below the current correction’s lower trend line, which could potentially extend the downtrend beyond the $2 mark.
3)Notcoin (NOT)
ONE possibility: The cryptocurrency project Notcoin (NOT) is based on The Open Network (TON) blockchain and garnered popularity through a viral tapping game on Telegram. On June 2nd, NOT’s price experienced a sudden reversal at the $0.029 resistance mark, leading to a substantial decrease of 47% to reach $0.015. Consequently, the market capitalization fell to $1.642 billion.
As a researcher studying the cryptocurrency market, I had anticipated a correction for Notcoin following its aggressive rally in May’s second half. However, given the escalating market uncertainty leading up to the release of US Consumer Price Index (CPI) data, there is a strong possibility that Notcoin could experience a significant downturn in momentum.
The Notcoin experienced a decline of 10.48% intraday, hinting at a potential bearish breakthrough from its 20-day moving average trendline. If this breakdown occurs, sellers may gain control, potentially causing the price to drop further to $0.011 and then $0.00458.
Takeaway
It’s typical for cryptocurrency markets to exhibit heightened volatility and experience significant declines prior to the US Consumer Price Index (CPI) data release. Market players, fearing inflation or anticipating potential interest rate reductions, may intensify selling of major altcoins in the days leading up to the announcement. Following the CPI release, however, market pressure tends to lessen, allowing assets to potentially regain ground.
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2024-06-11 17:32