Cryptocurrency and stock markets are down and apart from the positive news that Celsius has paid the entire debt and has avoided a massive sell-off, there are few specific reasons that are driving investors to buy Bitcoin and altcoins.
The collapse of numerous protocols decentralized finance (DeFi), investment funds in cryptocurrencies and the fact that the price of BTC is trading 60% below its all-time high continues to weigh on investor confidence, but some positive data could be a sign that the market is ready to enter a consolidation phase.
expect people will shift from a comatose state of fear to the realization that tens of billions of $ in forced spot selling (LFG, 3AC, lenders, miners) were a capitulation/risk transfer rivaled only by the Covid crash https://t. co/vAj7HfTKxf
— light (@lightcrypto) July 7, 2022
Crypto investors refuse to sell
According to a recent survey conducted by Appinio, despite the collapse in cryptocurrency prices and the start of the bear market, “more than half (55%) of cryptocurrency investors held on to their holdings in response to the recent crash.” of the crypto asset market, with only 8% selling their holdings.”
This suggests that the investment conviction of most cryptocurrency investors remains strong. The study also found that “33% of US investors are invested in crypto assets,” and “40% of investors believe that Bitcoin presents the best investment opportunity in the next three months.”
American investors show resistance
As for the response of US investors to the general downturn in financial markets, Appinio found that 65% of respondents kept their investments and remain confident in their decision.
When asked to list their most pressing short-term concerns, 66% of respondents cited rising inflation, 39% highlighted the state of the world economy, and 34% identified international conflicts.
According to CallieCox, eToro US Investment Analyst, these concerns, combined with continued uncertainty “and a general increase in the cost of living and housing”, have formed “a perfect storm of setbacks” for investors.
Cox said:
“Despite these factors, investors of all generations are demonstrating a level of maturity and understanding and are not letting emotions dictate important monetary decisions.”
Bitcoin enters oversold territory
In addition to the resistance shown by cryptocurrency investors, Various on-chain metrics also suggest that the market may have reached oversold territory and is poised for a period of consolidation.
The MVRV Z-Score, which uses a combination of the market value of Bitcoin, the realized value and the Z-Score, has been a reliable tool to help identify when BTC is “grossly overvalued or undervalued relative to its fair price”, according to LookIntoBitcoin.
As can be seen from the chart above, periods where a red Z-Score falls into the lower green band have represented good BTC buying opportunities, as well as times when the market price fell below the realized price, a feature shown by the blue and yellow lines at the top of the chart.
The Bitcoin trading tool provided by LookIntoBitcoin also offers insights into when buying or selling Bitcoin can yield big profits.
The green highlighted areas on the chart represent periods of time when the price of Bitcoin is at a level that is considered historically low and may represent a good buying opportunity.
Keep in mind that with the Bitcoin trading tool and the MVRV Z-Score, the time spent in bear market conditions varies and can be prolonged, so investors would be wise not to base their thesis solely on a concrete metric or indicator in isolation.
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 do your own research when making a decision.
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