After the recent increase in quotations, the cryptocurrency market is now in moderate decline. The total cryptocurrency market capitalization has again surpassed $ 2 trillion, an important psychological level. This sign was last seen in mid-May. While there is some market correction pressure, the current market pullback is very limited.
The dominance index for Bitcoin continued to drop to 43,6%. This indicates that altcoins are in high demand. The retail sector is likely to continue to believe in the long-term potential of the market and prefer to diversify its investments, if not by investing in top coins.
Since last week, the Crypto Fear & Greed Index (for Bitcoin and other major cryptocurrencies) has remained "on the rise". Although the current state of the indicator should indicate a correction, it has been shown many times that the traditional market and the cryptocurrency sector can continue to ignore reality and grow for long periods of time. It can't go on like this forever.
The current hash rate of the Bitcoin network is at the level of November 2020. It is constantly increasing. While this level is not the all-time high, it is clear that more miners will launch their ASICs as autumn approaches.
According to conventional wisdom, the price of the asset will increase as the hashrate increases. However, it's not just the price that goes up. Miners also face increasing difficulties due to the growth of the hash rate. This business is still very profitable, and after China expelled the miners, it became very profitable for some time.
The cost of mining Bitcoin is, however, one of the few metrics that cryptocurrency market participants use as a fundamental price driver. This direction may indicate a continuous rise in the price.
The cryptocurrency market could see a new impetus if there is enough momentum. This could be similar to Tesla's investment in Bitcoin. The situation with stimuli from major central banks, as well as the state of the world's major economies, is likely to have a significant impact on the future of Bitcoin and the rest of the cryptocurrency market that follows it.
Up until 3 years ago, the correlation with the traditional market was strongly affected by holders of digital currencies.
While attitudes have changed since big investors could stop a cryptocurrency market correction, it's important to remember that institutional investors aren't crypto enthusiasts.
Bitcoin is still gaining momentum
Bitcoin continues to struggle towards $ 50.000. The rises are becoming more erratic and can go down very quickly. Although the momentum may change in a flash, especially in the cryptocurrency market, it appears that bitcoin may struggle to break through the $ 50.000-51.000 resistance the first time they ask.
However, a fix would not be the end of things. It is still in a healthy position ahead of the last months of the year. It would be interesting to see a correction back towards $ 41.000, as it marks a key risk area and is such a significant resistance area between May and August. However, it is probably too early to discuss these levels.