In recent weeks, the crypto market has faced headwinds from multiple directions. The resulting price drops test the resolve of investors who have recently bought in. What does their behavior say about whether we are still in a bull market? You'll read more about it in this Weekly!

This weekly in brief: 

• Market: The crypto market moved mostly sideways over the past week, with the price of bitcoin around $62,000 and the price of ether around $3,400.
• News: New European regulations aimed at stablecoins took effect on June 30. Circle (USDC) is the first to obtain a license. And is Michael Dell of Dell Technologies flirting with bitcoin?
• Behind the Scenes: Recently, we hosted DUFAS members at our office for a knowledge session on crypto and tokenized assets. We look back on an interesting and successful afternoon!

Market Update

On February 28, 2024, we saw the bitcoin price rise above $60,000 for the first time since December 2021. That was exactly four months ago last Friday. Except for two days, we have closed above $60,000 every day since then. This is less than 20% below the top of $73,800.

With this prolonged sideways movement, the market is digesting the enormous price increase of the previous six months. Between October 2023 and March 2024, the price rose about 180% from $26,500 to $73,800, passing the all-time high of the previous bull market at $69,000 along the way.

During such a rise, a significant amount of unrealized profit builds up. Sentiment becomes very optimistic, bordering on overconfidence. Investors who want to sell hold off, thinking the price will be much higher tomorrow than today. Until the price increase stalls, and they sell after all.

The following correction gives every investor a chance to react to these higher prices. Some take their profits and exit, while others see confirmation of their hypothesis and enter. On balance, the price moves sideways.

Twice we were near the top of the price range, above $70,000. And now twice at the bottom. Last week, after a two-week decline, we hit $58,500, and since then, we've been hovering around $62,000.

Did we see the lowest point last week and are now rising again to the top of the price range? To confirm this, we want to see higher highs (HH) and higher lows (HL) in the short term. And eventually break above the 50-day moving average, which is now at $66,500.

Most indicators that gauge market temperature have returned to neutral or cooled levels, similar to what we saw in September and October last year. This is a nice result of such a long correction. A sentiment reset is a good starting point for resuming the bull market.

Confidence in the bull market is being tested now. This is visible in the on-chain data. By looking at blockchain transactions, we get a picture of the behavior of different groups of investors. An interesting segment is the group of investors who have recently bought, the short-term holders (STH).

These 'recent buyers' have historically been a good indicator of short-term up- or downside potential. How these short-term holders behave depends on whether it's a bull or bear market. In a bull market, they are willing to take profits where possible but refuse to take significant losses.

At the moment, they are slightly at a loss. Their average purchase price is $64,400, and even after the recent price rise, the price is still slightly below that. If we rise above the 50-day moving average of $66,500, we will also be above the cost basis of the short-term holders. If that happens, they will confirm with their behavior that they believe we are in a bull market, as they have taken little loss even during this dip.

News Overview

Het overige nieuws:

• More Central Banks Warming Up to CBDCs: Research by the BIS and the IMF shows that digital central bank money can improve financial inclusion and diversity and reduce the costs of issuing and using money. The IMF’s research was conducted in collaboration with 19 central banks in the Middle East and Central Asia.
  
• Sony Prepares to Launch a Crypto Exchange: Last year, the group acquired the local platform WhaleFin. According to a press release, it will soon be relaunched under a new name. This includes a revamped user interface and the release of a new mobile application. Last year, Sony registered a patent for the use of NFTs for in-game items.
  
• New European Regulations for Stablecoins in Force: Since Thursday, June 30, parties issuing stablecoins must comply with the MiCA rules applicable to them. Tether (USDT) has not yet obtained the necessary documents, but Circle (USDC) announced on Monday that it has received the license. Both companies previously stated that they encountered requirements that were unworkable in practice. It is unclear whether Tether is also in the running for a stablecoin license.