A very welcome downtick in US inflation to 3% in June has led to a rally in stocks. Today, the crypto market has woken up and is trending higher.
Crypto not moving on good inflation data?
A report in the India-based Business Standard somewhat jumped the gun. It accused the crypto market of standing still as stocks and bonds increased in value following the perceived good news in the June inflation figure of 3%.
Based on what was seen as the crypto market not making hay while global markets were doing just that, an analyst who commented in the article went as far as to suggest that this was a “bad sign” and that bitcoin’s odds of falling to $26,000 to $25,000 were increasing.
Crypto wakes up
Only one day later and crypto is painting a different story. Bitcoin suddenly shot out of its sideways slumber and is currently up 0.6%. It may be that it only increases to the top of the range at around $31,400 but the longer this accumulation phase lasts, the more explosive the resulting move is likely to be.
USDT dominance has moved in the opposite direction which is probably only to be expected, and this has released the altcoins from their shackles of the last few days. Comparing the USDT dominance chart to Bitcoin shows the former to be on the brink of breaking down, while the latter is looking like breaking higher.
The Total 3 chart, which includes all cryptocurrencies except bitcoin and ethereum, has just broken to the upside and is now under the next resistance at $334.5 billion. A break of this should lead to $345 billion and then potentially $352 billion.
DoJ bitcoin overhang
However, it’s not all blue skies ahead for crypto by any means. The overhang of the US Justice Department selling its bitcoin can dent the market. News broke recently that the next batch of 9000 BTC has been transferred to a new address, perhaps being made ready to be sold.
The last same-size batch to be sold hardly made an impression as the market swallowed it and recovered immediately. The impact of this latest tranche remains to be seen, with 3 further tranches still to be sold by the end of this year.
Bitcoin and cryptocurrencies good long-term?
Whether bitcoin and crypto go up or down over the next few weeks and months is generally immaterial. The dire state of the dollar and all other fiat currencies, as they continue to heavily lose their purchasing power, is a major reason to have at least some of one’s wealth in bitcoin. Cryptocurrencies are more speculative, but if it is accepted that they are bringing a huge technical revolution, not just to finance, but to many other areas of economic activity, then as things stand, this speculation may not be as risky as just holding fiat in the bank.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
