From technicals to turnover, market indicatorsare flashing red or amber for the biggest cryptocurrency, which has lost athird of its value in just two months.
So what now?
Bitcoin"s limited history isn"t much of aguide on crypto winters, which we"re defining as prolonged bearishness for amonth or more.
There have been five since 2017 and threesince 2021. Last year"s two crashes lasted 14 and 10 weeks and caused bitcointo lose 45% to 47%. If they were typical, bitcoin"s latest drop - 36% shed ineight weeks - has road left to run.
"Bitcoin is just not attractive to retailinvestors right now. Nobody really sees that potential for bitcoin to give out10 times (return)," said Joseph Edwards, head of financial strategy at fundmanagement firm Solrise Finance.
Indeed the macro background is far fromsupportive for an asset class now firmly seen as volatile, risky - plusvulnerable in the face of inflation. As worries over rising global rates andgeopolitics bring US stocks close to confirming a bear market, cryptocurrenciesaren"t on anyone"s shopping list.
Yet even in the icy wilderness, there are somesigns that the crypto king is plotting its comeback.
Bitcoin is drawing strength from the rest ofthe crypto market, for example, its relative stature providing some comfort forinvestors fleeing altcoins such as stablecoins deemed ultra-risky after thecollapse of TerraUSD in early May.
Bitcoin dominance, a measure of the ratiobetween its market cap to the rest of cryptocurrency markets, has jumped to aseven-month high of over 44% even as its price has decreased.
"Institutional investors particularly arefleeing to safety, to a certain extent, to bitcoin, which has the mostinstitutional adoption," said Marcus Sotiriou, analyst at UK-based assetbroker GlobalBlock.
Last week, bitcoin futures saw their largestnet long position since the contract was launched in 2018, CFTC data showed,indicating traders are increasing positioning for a rise in the price of thecryptocurrency.
FEAR AND GREED
Scary times, though.
Bitcoin has lost half its value since a Nov.10 peak of $69,000. This week, it is flirting with $30,000, after touching a17-month low of $25,401 on May 12. It remains the largest digital asset bymarket cap, but the market value of all cryptocurrencies now stands at $1.3trillion, less than half the $3 trillion peak in November.
Data platform Coinglass"s bitcoin Fear &Greed index of market sentiment - where 0 indicates extreme fear and 100extreme greed - is hovering at 13.
Ether , the No. 2 token by market value, hashovered near the $2,000 mark, and is down about 60% from a peak of $4,868 onNov. 10.
Bilal Hafeez, CEO at research firm Macro Hive,pointed to $2,300 and $2,500 as key levels and warned that failure to holdabove either of those marks in the near term would be a bearish signal.
The crypto market is cowed.
Total spot market volume for allcryptocurrencies at major exchanges had fallen to $18.4 billion as of Monday -less than half of the $48.2 billion seen on May 14, which was the highestvolume for 2022, according to news and research site The Block.
Blockchain analytics firm Glassnode said onMay 9 that bitcoin at $33,600 puts 40% of investors underwater on theirholdings.
"Many folks are left wondering what theyshould do with their coins – keep holding on for dear life or book losses andmove on?" said Lindsey Bell, chief markets and money strategist at AllyInvest.
"It"s a good reminder that cryptoprobably shouldn"t be more than, say, 1-2% of your portfolio."
