The FOMC's decision could limit crypto gains.
The FOMC's decision on Sept. 21 could lead traders to reduce their risk exposure, which could in turn limit the recent gains seen across the crypto market.
The overall trend for cryptocurrency markets over the past 55 days has been bearish, with prices falling back below the $1 trillion mark earlier this week. However, prices have stabilized in recent days and appear to be finding some support at the $950 billion level. It remains to be seen if this will be enough to turn the trend around in the coming days and weeks.
The recent rally in the crypto markets has been accompanied by an improvement in traditional markets. The tech-heavy Nasdaq Composite Index has gained 6.2% since Sept. 6, and WTI oil prices have rallied 7.8% since Sept. 7. This data reinforces the high correlation between crypto assets and traditional assets and highlights the importance of closely monitoring macroeconomic conditions.
The correlation metric is an important tool for traders and investors to assess the relationship between two markets. A positive correlation means that the markets move in the same direction, while a negative correlation means that the markets move in opposite directions. A lack of relationship between the two assets would be represented by 0.
It is clear that the Nasdaq composite index and Bitcoin have had a strong relationship throughout 2022, with their 50-day correlation currently standing at 0.74. This is likely to continue in the future, as both asset classes continue to be popular with investors.
The FED's decision on September 21st will set the mood for the markets.
As the Federal Reserve prepares to meet later this month, investors are on edge about the possibility of another interest rate hike. While most expect the central bank to raise rates by 0.75 percentage points, investors are hoping to see signs that the economic tightening is beginning to ease.
As we await the release of the U.S. consumer price index report on Sept. 13, all eyes will be on the inflation metric to see how it fares. Then, on Sept. 15, investors will be closely watching the U.S. retail sales and industrial production data to get a better sense of the overall health of the economy.
The current regulatory environment for cryptocurrency firms remains largely unfavorable, especially after the enforcement director for the United States Securities and Exchange Commission (SEC), Gurbir Grewal, said the financial regulator would continue to investigate and bring enforcement actions against crypto firms. This puts cryptocurrency firms in a difficult position, as they must navigate a complex and ever-changing regulatory landscape in order to stay compliant and avoid costly penalties. However, despite the challenges, many firms are committed to operating in the space and are working to find creative solutions that will allow them to continue to grow and thrive.
Altcoins rallied, but pro traders were resilient to leverage longs
The total crypto market capitalization gained 8.3% last week, to reach $1.08 trillion. Bitcoin (BTC) was the standout performer, gaining 12.5% and increasing its dominance rate to 41.3%. This is the highest BTC dominance rate since August 9. Other major winners included Ethereum (ETH), which gained 8.3%, and Litecoin (LTC), which gained 9.4%.
It is great to see Terra (LUNA) jump 107.7% after approving a proposal for an additional airdrop of over 19 million LUNA tokens. This is a clear indication that the project is on the right track and is gaining traction among investors. I believe that this positive momentum will continue in the future and Terra will become a leading cryptocurrency project.
The Ravencoin network hashrate reached 5.7 TH per second on January 8, 2022, the highest level since January 2022. This increase in hashrate led to a 65.8% increase in the price of RVN.
The Cosmos ecosystem is gaining more attention from the crypto community, as evidenced by the recent 24.6% price increase of ATOM tokens. This comes after research firm Delphi Digital shifted the focus of its R&D arm to Cosmos. With more eyes on this young ecosystem, we can expect great things in the future. Stay tuned for more updates!
This paragraph provides an overview of the professional traders' market position and how it can be interpreted. It also highlights the importance of tracking market markers and whales in order to make informed decisions.
A positive funding rate is a sign that investors are confident in the market and are willing to take on more risk. However, when the funding rate turns negative, it indicates that sellers are more cautious and are requiring extra protection against potential losses.
It is positive that the vast majority of perpetual contracts are exhibiting flat funding rates, as this reflects a neutral sentiment among traders. The exceptions of ETH and ETC may be due to the upcoming Ethereum merge and transition to Proof-of-Stake, which is scheduled for September 15th. This event could potentially have a significant impact on the price of Ethereum, so it is not surprising that traders are hedging their positions in anticipation.
It's been a tough few months for the markets, with broad indexes like the S&P 500 down more than 10% from their all-time highs.
The odds of a downtrend are still high, but there's hope for a rebound.
While the 8.3% weekly performance is positive, it cannot be seen as a trend change. It is likely that the move was due to the recovery in traditional markets. Additionally, it is probable that investors are taking into account the possibility of further regulatory impact following Gary Gensler’s remarks.
There is still uncertainty about potential macroeconomic triggers, and traders are unlikely to add risk ahead of important events like the FOMC interest rate decision. For this reason, bears have reason to believe that the prevailing longer-term descending formation will resume in the upcoming weeks.
As the cryptocurrency market continues to experience volatility, professional traders are becoming increasingly cautious. This is evident in the neutral futures funding rate, which is a sign that investors are not interested in taking on additional risk. If the market capitalization falls to $940 million, traders should expect a 12.5% price drop from the current level.
