Market

A Distant Threat or Imminent Reality?

Published

1 month ago

August 16, 2024

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On average, a crypto bear market lasts about a year, sometimes extending to two. This phase occurs when supply surpasses demand, causing prices to decline over an extended period.

One of the most severe bear markets unfolded in 2022. During this time, FTX, one of the largest crypto exchanges by trading volume, collapsed following a massive bank run. The downfall triggered a ripple effect, leading to the collapse of several hedge funds and lending protocols, marking a significant low point for the industry.

Bear Market Psychology Explained

Recently, there’s been talk about the crypto market heading back into a bear phase. Many cryptocurrencies have struggled since Bitcoin (BTC) hit $73,750 in March. The decline has raised concerns that the market might be entering another long period of falling prices.

The event, which surprisingly happened before the halving, sent shockwaves around the market. At that time, many suggested that crypto prices would hit higher highs.

However, this has not been the case. Instead, BTC’s price, alongside other cryptocurrencies, has either been consolidating, falling, or involved in false breakouts.

These factors, among others, have led some participants to suggest that the market might be heading into a bear phase. To evaluate this possibility, BeInCrypto examines the market cycle psychology chart for insights.

Read more: How To Make Money in a Bear Market

Psychology of a Market Cycle. Source: Quantified Strategies

As seen above, this chart shows 14 different stages. For instance, the disbelief marks the end of the bear market when cryptos begin to move into the bull phase. There are also phases of thrill, anxiety, euphoria, or complacency.

From the look of things, the disbelief stage happened around the first quarter of 2023, when the Bitcoin price began to post gains consistently. Meanwhile, the “Thrill” period probably happened during the ETF approval earlier in January this year, as there were calls for people to double down on buying BTC.

Euphoria probably occurred in between March when BTC and many other altcoins and meme coins reached different heights. The cool-off in recent times may suggest that this cycle is between complacency and anxiety, which usually precedes a bear market.

Bitcoin Holders Say a Big No to the Downturn Despite ETH Issues

However, the periods of complacency and anxiety may have been false alarms. According to Glassnode, the Bitcoin Long-Term Holder Sell-side Risk Ratio offers a clue. This metric measures the level of profit-taking compared to past market cycles.

Currently, the ratio remains below the peak seen during the 2021 bull market, indicating that long-term Bitcoin holders are refraining from selling.

Bitcoin Long-Term Holder Sell-side Risk Ratio. Source: Glassnode

Actions like this suggest high conviction among long-term holders. With respect to this, the on-chain analytic platform explains that:

“An elevated percentage of Bitcoin network wealth is held by this investor cohort relative to previous cycle ATH breaks, which suggests there is a degree of investor patience on display, and waiting for higher prices.”

If this holds true, the bear market might not be imminent, and the cycle could still be in its bear phase. However, some market participants remain skeptical due to the underperformance of certain altcoins, particularly Ethereum (ETH).

In 2021, after Bitcoin reached its all-time high (ATH), ETH quickly followed suit and surpassed its previous peak. This time, however, the situation is different, even with the launch of spot Ethereum ETFs.

Currently, ETH trades at $2,657, marking a 45% drop from its ATH. Earlier, many market participants confidently predicted that the altcoin would reach between $8,000 and $10,000, but those expectations have yet to be realized.

Ethereum Price Analysis. — Ethereum Price. Source: TradingView

Some of those optimistic predictions have faded as ETH continues to underperform, strengthening the belief that a bear market is approaching. However, it’s important to recognize that top cryptocurrencies, including BTC and ETH, recently underwent a period of distribution, which contributed to the recent price correction.

Bears Are Still Lurking for a Crypto Winter

Market participants might also worry that crypto whales have slowed down on buying BTC. However, these pauses are typical during a bull cycle. Despite this, caution is advised, as indicated by the Net Unrealized Profit/Loss (NUPL).

The NUPL measures whether investors are in profit or loss. When the reading increases, it shows that more investors are seeing higher profits. Conversely, a decrease signals declining gains.

This metric also helps determine whether the market has entered a bear phase. An increase points to a stronger bull cycle, while a significant decrease raises the likelihood of a bear market.

Bitcoin Net Unrealized Profit/Loss. Source: CryptoQuant

At press time, Bitcoin’s NUPL stands at 0.46. In July, a similar drop in this range led BTC’s price to decline to $55,857. The last time the indicator hit this level, Bitcoin’s price fell to $42,576.

This makes the current reading a critical point for the market. If the NUPL continues to decrease and reaches 0.40 or lower, bears could take control. According to Grizzly, a pseudonymous analyst on CryptoQuant, if that happens, BTC could potentially drop to $40,000.

“If the index continues its downward movement, it’s reasonable to anticipate that the bears could take full control of the market. In such a scenario, the price could drop to around $40,000,” Grizzly wrote in his analysis.

Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.

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Market

$1.6 Billion in Bitcoin and Ethereum Options Expire After Fed Cut

Published

36 mins ago

September 20, 2024

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The crypto market is bracing for heightened volatility as nearly $1.6 billion worth of Bitcoin (BTC) and Ethereum (ETH) options expire today.

This event coincides with the Federal Reserve’s recent decision to cut interest rates by 50 basis points (bps).

Fed’s Decision Fuels the Crypto Market Rally Ahead of Major Options Expiry

According to data from Deribit, 20,037 Bitcoin options contracts worth approximately $1.26 billion will expire on September 20. These contracts have a put-to-call ratio of 0.85 and a maximum pain point of $58,500.

Expiring Bitcoin Options. Source: Deribit

Similarly, Ethereum’s options market is set to expire with 125,046 contracts worth $308.16 million. Today’s expiring Ethereum contracts have a put-to-call ratio of 0.65, with a maximum pain point of $2,350.

Expiring Ethereum Options. Source: Deribit

In options trading, the maximum pain point refers to the price level at which option holders would suffer the largest losses. It is essentially the price at which the highest number of options (both calls and puts) would expire worthless, inflicting maximum financial “pain” on traders. On the other hand, the put-to-call ratio gauges market sentiment by comparing the number of put options (bets on price declines) to call options (bets on price increases).

Greeks. live’s recent analysis outlined the impact of the Fed’s decision to cut rates for today’s expiring crypto options contracts. The analysts noted that the Fed’s move was largely expected and aligned with macroeconomic forecasts.

“Implied volatility declined significantly across all major maturities, with ultra-short-term IVs falling by over 25%, as short-term short-selling expectations by large investors fell short,” they wrote.

Looking ahead, Greeks.live also noted that there will be another interest rate meeting on November 8 and December 19 this year, where the market expects a cumulative 100 bps rate cut. The next rate cut could coincide with the US election, increasing the likelihood of heightened market volatility.

BeInCrypto reported that this week’s rate cut has positively impacted the crypto market. Following the decision, Bitcoin surged from the $59,000 level to surpass the $63,500 mark.

Similarly, Ethereum also experienced a significant increase during the period. Data showed that ETH skyrocketed from $2,293 to as high as $2,482.

However, both assets have now stabilized. At the time of writing, Bitcoin and Ethereum are trading at $62,890 and $2,450, respectively.

Despite the positive momentum, traders are advised to remain cautious. Historically, options expiration often leads to short-term instability in the market. The next few days will be crucial in determining whether Bitcoin and Ethereum can sustain their upward trends or if a period of correction is imminent.

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.

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Market

Crypto Pundit Predicts Historical 9,468% Pump To $27

Published

2 hours ago

September 20, 2024

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Este artículo también está disponible en español.

A new XRP price prediction by popular crypto pundit Egrag Crypto projects that the cryptocurrency could experience a historical price surge of about 9,468%. This predicted price gain would push XRP from its current price of $0.58 to $27, marking new All-Time Highs (ATHs).

XRP Price Forecasted To Pump To These Targets

Egrag Crypto has taken to X (formerly Twitter) to express his bullish outlook on XRP, predicting the cryptocurrency could surge as high as $27. On Wednesday, September 18, the crypto analyst shared a price chart illustrating a speculative breakdown of potential price movements for XRP using five distinctive color indicators to represent various price increase scenarios.

XRP Community Express Skepticism

While Egrag Crypto’s bullish projections for XRP raise the hopes of investors who have been HODLing the coin for years now despite its low value and persistent consolidation phase, many have also expressed doubts. A few crypto members criticized the analyst, calling him out for his overly bullish forecasts for XRP.

Crypto Brands Return to Sports Sponsorships With 26 Deals

Published

3 hours ago

September 20, 2024

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Crypto sports sponsorship is cautiously rebounding in 2024, signaling a modest revival from the downturn following the boom in 2021. Despite these signs of recovery, the sector still falls short of reaching the highs witnessed during the peak year.

The increase in sports sponsorship also indicates a recovery of the crypto market. Brands are sponsoring sports teams because they have additional funds available for such marketing activities.

The crypto industry started heavily investing in sports sponsorship in 2021. During that year, the industry saw an unprecedented expansion with 42 new deals, representing 45.6% of the total 92 sports sponsorships from 2021 to 2024.

This growth was propelled by a bullish digital currency market, which led to significant agreements. Notably, Crypto.com secured a $700 million deal for the naming rights of Staples Center, renaming it to Crypto.com Arena.

Additionally, FTX entered into a $210 million sponsorship with esports group Team SoloMid. The aggressive sponsorship came as firms sought mainstream visibility and adoption.

However, the narrative shifted drastically in 2022 with the market’s downturn. The sector saw a severe reduction in new deals, dropping to 25. The collapse of FTX, previously a key player, led to canceled deals, including its partnerships with the Miami Heat and other sports platforms.

Despite the downturn, some firms like Bybit and Vechain managed to secure substantial agreements; Bybit secured a $150 million deal with Red Bull Racing, and Vechain signed a $100 million contract with UFC.

The downward trend persisted into 2023, with only 8 new sponsorships signed, though 14 existing deals were renewed. Amidst prolonged bearish market conditions and the FTX fallout, the industry remained cautious, limiting substantial financial commitments. However, OKX demonstrated resilience by securing a $70 million deal with Manchester City, illustrating that strategic investments could still thrive.

By 2024, the industry witnessed a gentle recovery, with 26 new sponsorships and 16 continuing from prior years. Noteworthy among these was Crypto.com’s sponsorship with the UEFA Champions League and BlockDAG’s $10 million deal with Borussia Dortmund (BVB). Additionally, Bitget announced a new partnership with LaLiga to enhance crypto adoption in Southeast Asia, Eastern Europe, and Latin America.

“The volume of new sponsorships has not surpassed the 2021 levels, but the uptick in activity suggests crypto firms are slowly re-entering the sports space,” CoinGecko said.

Crypto Sponsorships in Sports. Source: CoinGecko

Specifically, crypto sponsorships have primarily focused on football, with early adopters including prominent clubs like Manchester United, Chelsea, and Manchester City. The strategy extended to global events such as the UEFA Champions League and the FIFA World Cup, leveraging football’s massive international following.

Despite the market’s volatility, some partnerships, like Crypto.com’s diverse sponsorships and Bybit’s strong presence in Formula 1, have become long-term success stories.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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