The cryptocurrency market has seen a relief rally, starting on July 13 when the news broke that courts had ruled in favor of Ripple Labs ‘ programmatic sales.
The uncertainty looming over the token has been present for years, so, after a partial victory, the market reacted with extreme positivity. The price of the XRP token spiked just shy of 100% in a matter of hours, and some of the altcoins followed.
Since then, some pullback and trend continuations occurred, but the overall picture looks stagnant, especially if we look at the chart of major coins (BTC, ETH, and BNB).
Volatility is diminishing, and with these regulatory fundamentals serving as a catalyst to boost positive market sentiment, it just might not be enough to propel it into a sustainable uptrend.
Even those that spiked in price following XRP – like XLM and SOL – have barely made it back to peak levels.
The prices are moving very slowly, especially considering the large momentum we saw only a week ago. Does this mean that the market has reached exuberance and that euphoria ran out?
With regard to general market sentiment, we have to take a deeper look into Bitcoin and Ethereum as the most dominant cryptocurrencies.
Since June 18 last year, the price of BTC and ETH have been on the rise and came back into their significant horizontal resistance zones in mid-April. This point has been viewed at the time as a potential ending of the price rise from which a downturn move was expected.
At first, we saw a downtrend developing until June 15, but then, instead of a corrective increase, the prices started impulsively moving to the upside. Worth noting is that, unlike the price of ETH, the price of BTC made a minor higher high compared to April’s price, and even though it was a minor one, it made it clear that mid-April wasn’t the end of the rise.
However, the price of Bitcoin has shown indecision since June 21, when it started moving sideways and formed a horizontal range. Ethereum didn’t make a sideways move, but it also formed a slightly ascending horizontal range, currently resembling a wedge that is indicative of an ending move.
Whale activity has been diminishing since the mid-April high for the price of Bitcoin. There weren’t any significant increases around the June spike as well, but now we have seen the start of an uptrend, hinting at the looming volatility.
MPI has been rising since June 11, indicating potential selling pressure coming from the supply side. This doesn’t have to mean that the price of Bitcoins will drop, but instead that maybe mines would sell their Bitcoin for altcoins and play into the temporary hype.
The last time we saw rising MPI, it was followed by a price increase, so this metric should be viewed as it is – inflow of Bitcoin to exchanges from the miners’ side, again hinting at looming volatility.
The Short Term Output Profit Ratio is on the rise again from July 15, after a diminishing period. Currently, this metric is just above its 1 mark, meaning that short-term holders are selling the coins to lock in their profits. Since their activity is increasing, this can again be interpreted as an early sign of the coming volatility.
The volatility has diminished, with the market being stagnant in the past week and even showing indecision. The XRP vs. SEC news definitely served as a catalyst for growth, but the investor’s exuberance might have reached its limits, as indicated by the price charts.
Bitcoin on-chain data suggests looming volatility from every side – whales, short-term holders, and miners. It is still unclear where the market is headed next, but one thing is certain – we will again enter a period of high volatility.
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.