CoinLoan Weekly: New headwinds, oversold ETH, sellers’ hesitation
Faced with new challenges, BTC shed over 20% over the past seven days. Following a peak of $31,522.65 on Wednesday, June 8, it settled down before another rapid descent. On Monday, June 13, the price bounced back from the lowest low of $22,839.24.
On June 10, the markets responded to the CPI data – the US Labor Department reported 8.6% inflation in May, the highest since 1981. Adding fuel to the fire, Celsius’s pause on withdrawals triggered a massive selloff on June 13. The Fear and Greed Index has indicated extreme fear for over a month.
As of now, BTC is trading at $23,261.97, with a 24-hour loss of -15.4% and a 7-day change of -22.3%.
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Responding to the same triggers, Ether lost over 30% in total. After a promising start ($1,873.33 on Tuesday, June 7), it entered a slim range and fell on Friday, June 10. On Monday, June 13, the price ticked up from the 7-day low of $1,194.09.
Last week, ETH entered the oversold territory for the first time since November 2018. Back then, the crash was followed by a 400% rally, which could prompt patient investors to buy the dip.
As of this writing, ETH is trading at $1,229.48, with a 24-hour drop of -17.2% and a 7-day loss of -31.9%.
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Despite a similar trajectory, XRP saw modest losses compared to ETH. The range following Wednesday’s peak ($0.415390 on June 8) lasted until Friday, June 10. On Monday, June 13, the price dipped to $0.305778.
Earlier this month, the team at Finder saw XRP at a value of $4.98 by 2030. In the short-term perspective, however, it could test support at $0.28. The week brought a new development in the long-running court case – Ripple Labs’ reply condemning the SEC’s “deficient” responses to its Defendants’ Fourth Set of RFAs.
As of now, XRP is trading at $0.319924, with a 24-hour dip of -9.9% and a 7-day slide of -19.2%.
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ETH enters the ‘oversold’ zone – is a rally in the cards?
On Sunday, June 12, Ether’s weekly relative strength index (RSI) turned oversold. ETH had not plunged that deep since November 2018, when it bounced back and grew nearly fourfold. Will this nosedive be different?
An asset is oversold when its RSI reading drops below 30. For traditional analysts, this is a chance to buy the dip and profit from the expected reversal. However, while the previous crash triggered a 400% rally, past performance does not guarantee future results.
Currently, the bear market is only deepening, indicating more pain ahead. That said, RSI under 30 makes ETH’s rebounding more likely, so a similar upside retracement may occur. Here are two possible scenarios for the rebound.
First, ETH/USD will need to reclaim support at the 200-week EMA (exponential moving average), which is now close to $1,620. If this happens, the next upswing could take ETH above its 50-week EMA (roughly $2,700), thereby doubling the price of June 12. Otherwise, the fall might resume, and $1,120 could become the next key level as it corresponds to the 0.782 Fib line.
Adding to Ether’s troubles, there are fears concerning the tokens staked on Beacon Chain. Although a gradual release is expected, investors worry that the assets will flood the markets after the Merge.
The Lido protocol, which holds around a third of staked ETH, does not only raise centralization concerns. Lido Staked Ethereum (stETH), a DeFi variant of the coin supposed to trade at a 1:1 ratio, strayed away from its peg on June 10. The token was designed to be redeemed for ETH following the Merge, but it acts as collateral on DeFi platforms. Its recent major selloff may be causing panic selling.
Crypto market cap falls below $1T, but some traders hesitate to sell
On Friday, June 10, cryptocurrencies and stocks were shaken by the data on the consumer price index (CPI). The latest report revealed an 8.6% year-on-year increase, triggering a sweeping plunge. However, there is still some good news for crypto investors – a slight recovery might be in the making.
The extreme fear is overwhelming – the Fear and Greed Index has remained in the zone since early May. This could be a buying opportunity, but the time and pace of recovery will depend on macroeconomics. As of now, investors have a few reasons for mild optimism:
- OKX Tether (USDT) premium
This measure of retail crypto trader demand in China slid to a 4% discount on May 31. While the drop is typical for bearish periods, the discount then shrank to 1.5% on June 10. Although modest, it reflected a change in the selling pressure and an interest in buying the dip. Traders are more reluctant to slash their positions at present levels.
- BTC and ETH futures funding rate
This indicator was slightly positive, showing that bulls wanted more leverage last week. Leveraged long positions became more appealing. The rate turns negative when sellers, not buyers, want more leverage. The mix of positive and negative funding rates for altcoins caused mixed sentiment in perpetual contracts (inverse swaps).
The general sentiment is still overwhelmingly bearish, and it is unclear if the Fed will delay its next interest rate hike. However, crypto investors can still expect a turnaround once the macroeconomic deterioration ceases.