The overall crypto market is still in retreat from its weekend highs. Meanwhile, analysts have debated whether things show signs of recovery or capitulation.
Since their weekend highs of just over $1.1 trillion, crypto markets have retreated by around $50 billion. Total market capitalization has lost almost 3% on the day, and prices are heading south again at the time of press.
Resistance is proving to be too much to overcome, and the bear market consolidation is continuing. Market observers and analysts are finding evidence for both scenarios, a recovery and capitulation.
A Case For Crypto Market Recovery
Cumberland crypto liquidity provider was bullish, claiming “a budding uptrend is taking shape in crypto,” in a tweet on Nov. 7. The company used a backdrop of a weakening U.S. dollar and a brightening macroeconomic environment. Cumberland added that the U.S. midterm elections today could also be bullish.
The greenback’s rally appears to have topped out, they noted. This is good news because that dollar strength killed sentiment across every major risk asset class, including commodities and crypto.
Furthermore, macroeconomic uncertainty from Russia’s war in Ukraine appears to have reached a state of “choppy equilibrium.”
“In the absence of new geopolitical developments, a reduction in volatility should result in higher asset prices.”
Additionally, crypto has been a point of concern for a new breed of tech-savvy “crypto voters” in the midterms. A win for the Republicans could usher in a period of higher stimulus and easier regulation, Cumberland noted.
Finally, there has been strong adoption of crypto despite the depressed token prices. “As we’ve seen from previous cycles, strong adoption narratives can lead to parabolic rallies,” it concluded.
Not So Fast…
Fundamentally, crypto markets may be strong, but on-chain metrics paint a different picture. On Nov. 8, Capriole Fund founder Charles Edwards shared a chart with a bleaker outlook.
It shows that Bitcoin’s unrealized profit and loss indicator is in the capitulation zone for long-term holders:
“We have entered the capitulation value zone (red) seen only once every 4 years in the past.”
On-chain bottom indicators are all flashing, and the charts strongly resemble previous bear market lows. Furthermore, some industry executives, such as Tezos co-founder Kathleen Breitman, are of the opinion that the ongoing crypto winter is going to get worse.
Meanwhile, analytics provider Glassnode reported that held and lost BTC reached a record high last week following aggressive accumulation.
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