Weekly session very marked by macro data in FIAT markets. Investors’ attention was focused on the meeting of the FOMC committee, the Federal Reserve. I am convinced that many investors in crypto assets were also aware of the news and statements of that meeting
And it is that the economic context affects both investors outside the cryptoassets market and those who are already within this market. It is very clear that data such as inflation apply and affect everyone equally.
Leaving aside the special situation we are experiencing, crypto assets are a solid investment option for more people, and that is being noticed in the attitude towards these assets of the regulators. In the press conference after the FOMC meeting, Governor Powell made explicit mention of stable coins, with a direct comment about the need to regulate these types of assets, as is natural from someone in charge of the major Central Bank of the world. He even goes so far as to affirm that under certain conditions, these assets can be very beneficial for the economy.
The influence of this news on the crypto market can be seen in the charts of both bitcoin and ethereum, where the last two meetings have been a turning point.
Appears an important floor zone for the entire market
Obviously this has not been the only reason or argument to see how the crypto asset market consolidated an important support area, but it has had its influence. The manifestation of this change in trend in the short term can be seen by analyzing the main assets of the DeFI ecosystem.
We can see how the weekly session clearly has two distinct periods:
• A first part of the session in which we hardly see activity, something positive from the point of view of analyzing the market momentum and demonstrating the exhaustion of the upward sentiment
• A second part of reaction and rebound in which the entire market has experienced strong rises, which in two cases exceeded 25% (eGold and AVAX)
Upward trend in TVL
But again, this turn in the market and this bullish sentiment in the short term derived from the novel ability to generate important support zones that the market is showing, is not the only indicator of the consolidation of this investment alternative.
We can see how the capital locked in DeFi protocols continues with a clear upward trend, indicating the confidence in these protocols by investors.
Faced with price falls, the alternative is no longer to leave the crypto ecosystem, or settle for seeking the refuge of stable coins, but instead seeking returns through the products and possibilities offered by decentralized finance
Sudden drop in risk perception
Another factor that generates optimism is to see how quickly the perception of risk in the market decreases, which must also be said that it had not been excessively important in this setback that we have experienced.
To analyze this data we can refer to the CVI Indicator that shows us an index in which we can see the hedging positions opened by the operators. This crypto indicator, analogous to the VIX in the traditional market, indicates panic and sales in high values and viceversa.
We can clearly see a very important decrease in the last hours
Positive balance of exchanges in large operators
However, this week we have seen how the balance of large operators with respect to exchanges turned slightly positive. The large operators have injected funds into their wallets on exchanges, surely encouraged by the market situation
The market continues to face a valley area
From a historical point of view we are in a zone of high difficulty for the bulls at the moment. Statistically for the market, it is easier to go down than to go up with a PCTATH index at 67 points, but the positive part is that the upward impulses in this situation when they occur tend to have a lot of speed. Therefore, watch out for possible sudden movements in the market, given that from a technical point of view the floor seems firm
Bullish in the long term
We did not want to close this post without appealing to common sense on the part of the investor. Despite the volatility that is typical of the crypto asset market, we have to analyze the movements that are taking place based on a long-term context. Otherwise, this volatility ends up masking any trend.
If we examine a long-term graph in logarithmic notation, we can appreciate with absolute clarity the long-term upward trend that we have in Bitcoin, and by extension in the crypto-asset market. Bitcoin continues to weigh heavily in all investment decisions
At Belobaba, we always try to give this long-term vision, the only one capable of giving consistent benefits.