Hodlers catch their breath as markets digest the prospect of higher Fed rate hikes, but traders refuse to believe that Bitcoin is done dropping.
Bitcoin (BTC) spared hodlers the pain of losing $20,000 on June 15 after BTC/USD came dangerously close to last cycle's high.BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
In a pause from its sell-off, the pair followed United States equities higher on the Wall Street open, hitting $21,700. The S&P 500 gained 1.4% after the opening bell, while the Nasdaq Composite Index managed 1.6%.
The renewed market strength, commentators said, was thanks to the majority already pricing in outsized key rate hikes by the Federal Reserve, due to be confirmed on the day.
Nonetheless, it was crypto taking the worst hit in the inflationary environment, Bloomberg chief commodity strategist Mike McGlone noted. In a tweet, he contrasted Bitcoin and altcoin performance with skyrocketing commodities, notably WTI crude oil, futures of which now traded at almost double their 200-week moving average.
"Unprecedented Crude Spike vs. Bottoms in Bitcoin, Bonds, Gold — Crude oil futures' historically extreme stretch above its 200-week mean is ample fuel for inflation to spike, consumer sentiment to plunge, Federal Reserve rate hikes to accelerate and an enduring hangover," he argued.WTI crude oil futures 1-week candle chart with 200-day moving average. Source: TradingView
Despite suppressed price action, many were unconvinced that Bitcoin could meanwhile sustain even the low $20,000 zone much longer.
"We have yet to see capitulation in the Crypto markets," popular trader Crypto Tony told Twitter followers.
"It is close, but doesn't feel like it yet. Every bounce is filled with optimism and it shouldn't be like that."
Fellow trader and analyst Rekt Capital agreed, saying that the sell-off had not been accompanied by suitable volume.
"Strong market-wide selling is going on for BTC," he wrote on the day.
"Undoubtedly, Seller Exhaustion lies ahead. Watch for high sellside volume bars. These tend to signal bottoming out after constant selling & precede an entire trend reversal over time."
Data meanwhile showed the extent to which panic selling had been taking place in the short term.
Weekly realized losses reached 2.6% of Bitcoin's realized cap, the highest ever, according to figures from on-chain analytics firm Glassnode illustrated by CryptoVizArt.
Bitcoin's net unrealized profit/loss (NUPL) metric, covering coins not physically sold, also demonstrated a significant proportion of the hodled supply being underwater — the most, in fact, since March 2020.
According to its accompanying scale, the metric has turning red after falling below zero, i.e., the historical "capitulation" zone.Bitcoin NUPL vs. BTC/USD chart. Source: TradingView
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.