The crypto market is up today after signs of seller exhaustion emerged, and a strengthening technical setup inspired traders to open new positions.
The cryptocurrency market is up today, with the total market capitalization rising by approximately 2% in the last 24 hours to reach $2.32 trillion on July 1. The rise in market cap includes gains from Bitcoin
BTC $62,865 and Ether (ETH), which have risen around 2.5% and 2.2%.
Major catalysts driving the crypto market upward today include a divergence in the macro environment, reducing sell-side pressure and a strengthening market structure.
Macroeconomic policy divergence and inflation
A closer analysis of the crypto market’s recent performance reveals that it has begun gaining strength since the Federal Open Market Committee (FOMC) meeting on June 12. The FOMC meeting largely met investors’ expectations by keeping the Fed Funds Target Range (FFTR) unchanged at 5.25%–5.50%. The drop U.S. inflation reflected by the consumer price index (CPI) came in softer than expected.
Last week, the Real Gross Domestic Product (RSI) print came in slightly higher than expected at 1.4%, adding to the improving market sentiment. In addition, the Personal Consumption Expenditures (PCE) report released on June 28, along with a slowdown in key areas such as the U.S. labor market in recent weeks, appears to have increased the prospects of at least two interest rate cuts by the central bank this year, likely in September and December.
The latest data from CME Group’s FedWatch Tool showed a 58.2% and 43.3% chance of rate cuts at the FOMC meetings on Sept. 18 and Dec. 18, respectively.
Crypto market recovers as seller exhaustion sets in
When evaluating the crypto bull market over multiple timeframes, trading activity can be broadly characterized by increased volatility to the upside, with numerous corrections and consolidations along the way.
Markets do not always move upward, creating a gap in supply and demand dynamics that causes local and global price correction events.
One way to evaluate supply and demand is to examine the flow of stablecoins in and out of exchanges.
Data from CryptoQuant shows the average size of the total amount of the top 10 USDT transactions outflowing from exchanges.
Analyzing the trend from 2023 to the present, the chart reveals a decrease in outflows after a strong surge, indicating that the large-scale selling pressure on exchanges is diminishing.
“This reduction in outflows suggests that investors are more inclined to hold their assets rather than withdrawing cash from the market.”
This could imply that investor sentiment has turned more positive as seller exhaustion sets in.
Meanwhile, Bitcoin’s spot price has crossed below the realized price of short-term holders (STHs), which was at $62,600. Currently, STHs are experiencing slightly negative average profitability, a metric that has historically been used to identify periods of seller exhaustion.
The crypto market sees a technical rebound
From a technical perspective, the crypto market’s gains today are part of a rebound that started at a support confluence comprising the major support at $2.182 trillion and the middle boundary of a descending parallel channel.
The total market cap, currently at $2.276 trillion, broke above the upper boundary of the channel during the July 1 recovery, signaling a breakout from the downtrend.
As a rule of this technical formation, the crypto market could rise toward the $2.52 trillion area, embraced by the upper tip of the declining channel.
Before achieving this, the total market cap has to overcome supplier congestion between $2.30 trillion and $2.358 trillion, where all the major moving averages lie.
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