Bitcoin's bear rally?

Market picture

The cryptocurrency market has survived the peak of fear, finding the strength to consolidate during European trading and begin a recovery during active hours in the Americas. As a result, the crypto market capitalisation is up 11.3% in 24 hours to $1.98 trillion. That's still -17% in seven days.

Bitcoin was trading at nearly $55.7K at the start of the European session, having recovered two-thirds of Monday's loss when the price bottomed out at $49K. The price is now close to the earlier lows.

Optimists can note the RSI's attempt to move out of the oversold zone and back into the familiar range. On Monday, there was also a tempting touch and bounce from the 50-week moving average, as if to prove that we are still in a bull market.

However, pessimists can easily point out that a similar spike in volatility has previously preceded long selloffs, with rebounds followed by periods of new dips.

Either way, Bitcoin's momentum may remain a bellwether for global financial market sentiment, as it is the most sensitive to fluctuations in risk appetite.

News background

According to CoinShares, crypto fund investments fell by $528 million last week after four weeks of inflows. Bitcoin investments fell by $400 million, Ethereum by $146 million and Solana by $3 million. Outflows from the Grayscale crypto ETF rose sharply to $806 million for the week.

According to Coinglass data, liquidations reached $1.10 billion on 5 August, the highest since 5 March. Of this, $813 million came from long positions.

Michael van de Poppe, founder of MN Trading, said days like this "usually define the beginning of a major crisis. Either that, or there will be a V-shaped reversal and a move towards Bitcoin as a safe-haven, along with Gold and Ethereum".

The network is also discussing the possible involvement of market maker Jump Crypto in the market dump. On 4 August, the company released 120,000 wETH on Lido and has since sold most of it, negatively affecting the second most-capitalised cryptocurrency.

According to US Republican presidential candidate Donald Trump, Bitcoin could be a key tool in tackling the growing US national debt, which has surpassed $35 trillion.