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It’s a feel-good day in traditional markets but not so much in crypto markets. With the dollar retracing on the previous session’s gains, equities bounced back up strongly, along with gold and oil. Other commodities like copper or lumber are still very much down but also stopped their descent, for now.
In the crypto space, one would’ve assumed that the dollar weakness and risk-on tilt in traditional markets would’ve helped. It didn’t. BTC fell a full 10%, $35,500 to now $32,000. It takes us back to previous days, earlier this month and late May, where we retested the lower 30K’s.
The news that took us further down is yet another announcement from China reminding local banks to not support transactions related to cryptocurrency speculations. For anybody who’s been in the crypto space long enough, this isn’t new. It did get a lot of traction yesterday, especially because you can see the hashrate actually dropping and so the measures having a real impact on the network.
A lot of selling took place, including from large holders (aka ‘whales’). You can also see the BTC futures rolling basis turning negative (backwardation) for the first time this year, hinting at an overall bearish sentiment.
In Korea, banks are set to ‘review’ partnerships with crypto exchanges, which can be interpreted in the best -but most likely- the worst ways.
In this crypto risk-off sentiment, a lot of people moved away from more volatile alts and back into BTC. The BTC dominance decidedly moved up, currently close to 47. If you believe crypto is headed further down, focusing on BTC might indeed be the safer place to maintain your crypto allocation, diversified holders are currently suffering more.
DOT, VET, AAVE, COMP, MKR, MATIC, LINK… pretty much any altcoin you could think of is down about 20%-25%.
It’s worth noting that during the drop, MicroStrategy announced the -almost expected- purchase of close to $500 million worth of BTC. But clearly, this time, it didn’t do much to help prices back up.
I suspect that for holders, we will need to weather the storm, even with visits at lower levels, while miners and whales reassess the situation.
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