Market Watch: Analysis Paralysis
Things are not going well in the crypto market. After the US inflation data was released on Friday, we encountered an extensive selling wave, especially in altcoins. The high sell-off in altcoins stemmed from concerns that the Ethereum merge would not be completed in August. Because the Ethereum community canceled the time bomb to reduce the psychological pressure on the developers. The time bomb is a mechanism that gradually reduces revenue from proof-of-work. Thus, it encourages the transition of miners from proof-of-work to proof-of-stake.
Concerns that Ethereum's transition to proof-of-stake will be delayed have caused the price of Staked Ether ($STETH) to drop as low as 0.94 ETH. This has put extra stress on the crypto market. In the chart below, we see that STETH has fallen below 1 ETH since the beginning of May. On Friday, the depreciation in STETH became more pronounced.
When the downtrend in prices becomes evident, investors' sensitivity to bad news increases. It was announced as 8.6% while the US inflation was expected to be 8.3%. The fact that the 0.3% difference led to such extensive sales in stock markets and crypto shows that investors are worried. On the other hand, the possibility of postponing the date of the merge does not appear for the first time. Investors, who previously ignored the news on the subject, preferred to make aggressive sales this time.
When we evaluate the situation of the market from the perspective of technical analysis, we do not encounter a pleasant picture at all. In Bitcoin, the critical 28.8k USD resistance, which has been supporting prices for the past month, has been broken. The next key resistance is the USD 22.3k level, where the 200-week moving average is located. In the previous bear markets, the price found support at this level. In Ethereum, prices declined rapidly after the critical $1750 resistance was broken.
Many crypto analysts state that the bear market can last between 6 months and 1 year. Analysts who have expressed pessimistic views about the market have been right so far.
On the Hive front, we can say that things are going well compared to the market in general. My past analysis has shown that the Hive price is correlated with web3 and play-to-earn coins. Glad to see it outperforming the coins in question. Hive ecosystem tokens such as SPS, Leo, and Polycub also showed no signs of extra vulnerability in this process.
To keep up with the latest developments, I downsized my 1.5x leveraged Ethereum position on Alpaca Finance. On the other hand, I paid a portion of the USDC loan I received with Bitcoin collateral on AAVE. Neither position actually faced liquidity risk. Still, I was prepared for the worst-case scenario.
I aim to own 50k Hive and 50k Leo by the end of this year. That's why I recently bought a 10k Hive for 40 cents. I had a plan to buy 10k more Hive with the stable coins I kept on PolyCub. I put this plan into action today. I got the power now :)
Conclusion
It is not easy to predict when prices will reach the bottom. When we torture the numbers enough, they can tell us all kinds of stories. Considering the historical averages, I think these levels are suitable for accumulation. And we have a responsibility to support the Hive ecosystem coins and tokens.
I am not a financial advisor. Please do your own research.
Thank you for reading.
Posted Using LeoFinance Beta
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Yeah. These are the times that are crucial as an investor.
Posted using LeoFinance Mobile