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Why The IMF Thinks The Crypto Market Could See “Further Selloffs”

The crypto market is trading in the green with Bitcoin and Ethereum pushing beyond critical resistance levels. The first and second cryptocurrencies by market capitalization record a 10% and 15% profit in the last day and seem poised for more profits during today’s trading session.

Related Reading | Bitcoin Makes Surprise Climb As Fed Discloses 0.75 Point Rate Bump

In order to get more clarity in terms of direction, Bitcoin must close the daily candle above $23,000 and Ethereum above $1,700. Data from Material Indicators records a thing order book on the sell side if BTC’s price can push above its current levels with high probabilities of hitting $28,000 in the short term.

If this rally can push past $25k, then $28k comes into focus very quickly. If you are long, don’t forget to take profits along the way.

When the bear wakes up from hibernation he’s going to be hangry. pic.twitter.com/YGe4Swu3wT

— Material Indicators (@MI_Algos) July 28, 2022

In longer timeframes, macro-economic conditions will remain an obstacle to any sustainable rally. In that sense, Tobian Adrian, Director of Monetary and Capital Market for the International Monetary Fund (IMF) predicted more losses in the nascent asset class.

In an interview with Yahoo Finance, Adrian spoke of the risk for the crypto market and risk-on assets, like stocks. For digital assets, Adrian believes that the collapse of a stablecoin could fuel another leg down. The IMF official said:

There could be further failures of some of the coin offerings — in particular, some of the algorithmic stablecoins that have been hit most hard, and there are others that could fail.

The IMF official referred to the collapse of the Terra (LUNA) ecosystem. This event led to the downfall of Three Arrows Capital, Celsius, and other companies in the crypto industry. Thus, contributing to the crash in the price of Bitcoin and other cryptocurrencies.

Adrian claims digital assets might face another similar event but doesn’t mention a specific project with the size of Terra that could trigger it. The IMF official believes stablecoins might add to the selling pressure in the nascent industry due to the alleged vulnerabilities in its collateral:

There’s some vulnerability there, because they’re not backed one to one. [Some fiat-backed stablecoins] are backed by somewhat risky assets…it is certainly a vulnerability that some of the stablecoins are not fully backed by cash-like assets.

BTC’s price with important gains on the 4-hour chart. Source: BTCUSDT Tradingview
Will The Crypto Market Collapse If There Is A 2008 Like Recession?

In addition to the alleged risk from stablecoins, the IMF official spoke about the potential risk of economic recession. The U.S. recently reported its second consecutive quarter with a negative GDP, which should technically spell economic recession.

However, Adrian ruled out that the global market would see something like in 2008. At that time the financial sector was exposed to “shadow banking”, to assets hidden from the banks’ balance sheets which collapse worsening the economic crisis.

Cryptocurrencies could face a bigger obstacle from international regulators. The IMF official claimed that these entities should enforce securities laws to the 40,000 he claims comprised the sector. He added:

Regulating the coins themselves is going to be difficult but regulating the entry points such as exchanges and wallet providers to invest in those coins, that’s something that is very concrete and very feasible.

The U.S. Securities and Exchange Commission (SEC) seems to be following this approach. The Commission has entered into legal battles with major players in the sector, including payment solutions company Ripple and crypto exchange Coinbase.

SEC Chairman Gary Gensler already stated that he is willing to acknowledge that only Bitcoin is out of their jurisdiction. If the Commission turns more aggressive, the crypto market could suffer as crypto projects scramble to meet regulations requirements.

Related Reading | Bitcoin Bounces Off Consolidation Range, What Lies In Store?

This is probably one of the biggest obstacles for the nascent asset class in the coming months along with macro-economic conditions. In that sense, the IMF official might be on point, but cryptocurrencies have been facing regulatory hostilities since their inception.

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Bitcoin Bounces Off Consolidation Range, What Lies In Store?

Bitcoin has been on a steady increase over the last two weeks. It has not been on the uptrend for all of this time, but the majority of the time, the digital asset has maintained this upward trajectory. This has seen it touch above $24,000 at one point after bouncing off its strong consolidation point. Now, as the digital asset trails $23,000, a couple of technical levels have begun to form beneath it.

Bitcoin Begins To Form Support

Bitcoin has broken above $23,000 once more, and support has begun to form. After previously losing its footing and falling to $21,000, the digital asset had seen support pushed down to $19,000, but this would change soon after. As bitcoin continues its uptrend, it is now looking at support at $21,000, much stronger than previously established.

Related Reading | Bullish Sentiment Spills Over To Institutional Investors As Ethereum Inflows Balloons

However, for the digital asset to continue on this bull rally, it would need to break some important technical levels. The first would be the $25,000 range, where the most resistance is currently being mounted. A widespread accumulation trend would be the only likely fuel to break through this level. After which, the nearest resistance would be formed at $28,000 due to it being the lowest point for the 2021 cycle.

BTC continues recovery trend | Source: BTCUSD on TradingView.com

On the other side of this, the digital asset still has some potential to fall back down. This would put it in the direct path of the $21,000 support, but this is unlikely to hold for the long term. The next significant support level would fall to $19,700, which represents the peak of the 2018 bull cycle. Hence, the support put up here would be strengthened compared to that at $19,000. But if this fails to hold, $17,600 would present to be the next important level due to being the current cycle low.

Related Reading | Ripple (XRP) Is Up 190% From Cycle Low, But Will It Ever Reach $3?

For now, as bitcoin climbs up, it is still expected to meet resistance at $24,000, which was the point it failed to beat last week. This makes it the most immediate threat for bulls in the quest to retake $30,000. This point determines if bitcoin would be able to break above the 50-day moving average, which would determine a bearish or bullish trend for the short term.

Sell-offs remain the major thing that is pulling back the value of bitcoin, though. While the short term is beginning to turn in favor of buy, the long-term outlook still poses a sell for investors. These sell-offs, which are yet to reach a fatigue point, are most likely the culprit behind bitcoin’s inability to breach $24,000 successfully.

Featured image from The Financial Express, chart from TradingView.com

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Bitcoin Makes Surprise Climb As Fed Discloses 0.75 Point Rate Bump

Bitcoin and the rest of the crypto market have been in a festive mood in response to the U.S. Federal Reserve’s interest rate hike, sending  both Bitcoin and Ethereum climbing in prices.

The Fed’s announcement has sent Bitcoin’s price up by 5%. As of this writing, Bitcoin is trading at $22,837, up 7 percent in the last 24 hours. More so, Ethereum’s price also spiked by 11.6%; hitting $1,550, data from Coingecko show, Thursday.

In fact, the entire crypto market is on a positive outlook with the total crypto market cap at $1 trillion.

Bitcoin was down the past week with its price plunging below $21,000. But, with Fed’s latest 0.75% rate bump, the BTC price has skyrocketed once again.

Fed Battling Inflation With Interest Rate Hikes

The Federal Reserve attempts to buffer inflation with a 0.75% rate increase. The central bank’s move on the rate hike is said to be in the country’s best interest especially since the U.S. Bureau of Labor Statistics recently broke it to the public that the Consumer Price Index or inflation rate is at 9.1% in June, a 40-year high.

The Fed’s continuing rate hikes have sent the negative message that the country could be in danger of a recession.

It triggered a domino effect. Following the Fed’s rate hike, the U.S. interest rates have also spiked at a range of 2.25% and 2.5% which is at extreme levels since the COVID-19 pandemic started. The U.S. central bank has recently revealed this development at the Federal Open Market Committee held Wednesday.

Related Reading | BNB Basks In The Green As Price Glows 5.84% In Fields Of Red

Survey: 96% Of Americans Worried About Inflation

The Fed has been trying to put a rein on the high prices with an increase in interest rates for the longest time. U.S. Bureau of Labor Statistics disclosed that the biggest factors adding up to the inflation rate are shelter, gasoline, and food price hikes.

Reportedly, a CNBC poll revealed that around 96% of Americans have been particularly worried or concerned lately regarding the gas, shelter, and food price increase.  

Image: Beinchain

To beat inflation, the Fed has the option to constrict the supply of money. So, it resorts to bumping the interest rates which in effect, makes loans expensive. The 0.75% rate hike was expected although it was earlier ruminated that the central bank may go for a 1% rate hike when inflation mellowed in June.

Related Reading | GNOX Set To Overtake APE, MATIC As Token’s Price Continues Ascent

The recurring high prices and interest rate hikes have fueled fear in citizens as the danger of a recession continues to escalate. It has heightened levels of uncertainty in global markets especially because a recession would most likely happen following two straight quarterly GDP drops.

The GDP as presented by the Bureau of Economic Analysis has shown that the economy has dwindled by 1.6% as shown in the first financial quarter and economists are concerned that a decline is possible too for the second quarter.

GDP Q2 numbers will be announced tomorrow. And the White House has already prepared the public for this important announcement with an interview transcript and blog post by Janet Yellen, the Treasury Secretary who has set the records straight that two consecutive quarters is not indicative of a recession.

More so, U.S. President Biden made an assurance of sorts that the country is not going to face a recession.

Crypto total market cap at $1.02 trillion on the daily chart | Source: TradingView.com
Featured image from Euronews, chart from TradingView.com

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Why “The Merge” Is Not Priced In, Says Ethereum Inventor Vitalik Buterin

Ethereum and the crypto market slightly recovered some gains after the Federal Reserve (Fed) announced a 75-basis point (bps) interest rate hike. There was no surprise from the financial institutions, and the second crypto by market cap might be able to extend the bullish trend without external distractions.

Related Reading | TA: Bitcoin Price Restarts Increase After Fed Rate Hike But Resistance Intact

At the time of writing, Ethereum (ETH) trades at $1,640 with an 11% profit in the last 24 hours and a 7% profit over the past week. The cryptocurrency has reclaimed its position as the best-performing asset in the top 10 by market cap.

ETH’s price moving sideways on the 4-hour chart. Source: ETHUSDT Tradingview

In an interview with Bankless, the inventor of Ethereum spoke about what could be the most bullish milestone for this blockchain since its inception: “The Merge”. The event that will complete ETH’s migration into a Proof-of-Stake (PoS) blockchain with the promise of bringing more scalability and better performance to the network.

For months, there has been an ongoing debate about the impact of this event on the price of Ethereum. Some market participants believe “The Merge” is already priced-in, meaning its impact is currently reflected on ETH’s price, others believe the opposite.

Buterin himself is amongst the former, he believes “The Merge” is not priced-in from a market and psychological standpoint. The positive impact of this event will have implications with the potential to ripple across the entire Ethereum ecosystem.

These effects will kick in when “The Merge” has been deployed on the mainnet. Buterin said:

The Merge is looking more and more in the review mirror. It’s looking more and more like “hey, this things is going to actually happen and when it happens I expect (developer’s) morale is going to go way up (…). I basically expect that “The Merge” is not going to be priced-in, by which I mean not just in market terms, but in psychological, and narrative terms (…).

What “The Merge” Could Spell For The Price Of Ethereum

Once “The Merge” has been implemented, Buterin predicts that Ethereum will change a “lot of minds”. This could potentially hint at the surge in the adoption of this network’s ecosystem.

There has been a lot of talk about cryptocurrencies and their alleged negative impact on the environment. “The Merge” is set to reduce Ethereum’s carbon emissions by 99%.

This could translate into more institutions and capital previously sidelined from the crypto space because of its environmental footprint thus, why this event might have profound implications in terms of adoption, price appreciation, and development.

Related Reading | TA: Ethereum Surges 15%, Why ETH Could Climb Above $1,700

On the latter, Buterin celebrated Ethereum’s capacity to improve its development speed across the years. After “The Merge”, ETH core developers will focus on scalability and building the infrastructure needed for mainstream adoption.

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Tron (TRX) Extends Gains As Prices Break Away From Support Point

While the rest of the crypto market is in a state of frenzy, Tron (TRX) price dominance is on for the second day in a row as its price swerves away from the support line. Tron has had a swift recovery so far.

TRX/USD swished to a 3% jump and intraday high of $0.06631 today in contrast to yesterday’s low that registered at $0.06383. The rebound was seen after TRX has been moving in the red zone for several days now.

The cross signals seen in the daily chart usually hint a downtrend but it somehow triggered a bull run.

Related Reading | Tezos (XTZ) Price Movement Indicates Looming Price Drop

TRON RSI To Cross 49.85 Resistance Line

This will be tested soon as the RSI is seen to cross the 49.85 resistance level. The current price of the TRX/USD pair is at $0.064 and has declined by 2.15% in the past 24 hours. In addition, trading volumes have reduced by 1.89 as seen overnight. TRX bears are seen to ascend in the coming days.

A few days ago, technical indicators all show a bearish perspective for Tron which has to retrieve the resistance level at $0.07 to gain back the confidence of investors and step on the gas for a bull run.

But, it seems the odds aren’t in favor of a bullish standpoint considering that the bears have already been collared in the market. Once the support level is hauled back to $0.06, then it’s the break the bulls needed to reclaim the market.

Crypto total market cap at $1.02 trillion on the daily chart | Source: TradingView.com
Can Bulls Tilt The Boat?

TRON’s RSI is transacting at around 40.85 following the failure to maintain the bullish streak impeding the bears’ dominance. Currently, the RSI line reveals a divergence showing that transactions are happening below the 14-day average line.

With that being said, it means trouble in paradise for the bulls who are eyeing the resistance line. The bears seem to have dominated on the red line but can the bulls tilt the boat? Can TRX beat the selling pressure? Tron is gaining in prices today and the bulls are definitely taking the lead hinting that anything is indeed possible.

Related Reading | BNB Basks In The Green As Price Glows 5.84% In Fields Of Red

Tron has been trying to outstage Ethereum since day one. It’s a platform that supports DeFi applications and smart contracts. Tron is looking to decentralize the internet and outperform Google and Facebook.

Users will need to buy and hold TRX to use the network’s storage, CPU, RAM, and other resources. Following that, users can freely transact on the network.

Featured image from AAX Academy, chart from TradingView.com