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Is investing in a bear market in crypto a good idea? Situation as of June 27

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investing in a bear market in crypto a good idea

Is investing in a bear market in crypto a good idea? Experts told about the dangers of investing in digital assets during a bear market and named some projects to watch out for

Everyone understands what causes a bear market in crypto. This is due to current world events. Cryptocurrency investing is a risky business. Even at a time when the market is growing steadily, there are plenty of dangers faced by their owners. Now that the market has entered a bearish phase and analysts are predicting even greater declines, cryptocurrency investments pose more and more risks.

Investors consider less risky products or take wait-and-see positions. However, even during the correction and the bear market, there are projects that may be interesting. What are the dangers of investing in altcoins in a downtrend? Tokens to watch out for.

A bankrupt portfolio in the longest bear market in crypto

Even with proper risk management, high-risk strategies are good for growth markets, but hardly justified in periods of recession and turbulence. The situation with Celsius and other major crypto platforms highlights the need for prudent risk management and careful project selection.

The crypto market may also have been affected by macroeconomic conditions, not just the problems of Celsius and 3AC. Against the backdrop of tighter Fed policies and even just expectations of a key rate hike, many investors are trying to get rid of high-risk assets. In such an environment, the liquidity of many tokens is decreasing, making their prices more sensitive to “whale” selling.

While some tokens may seem interesting in the short term (e.g., Avalanche), it is worth looking at the portfolios of large cryptocurrency companies that have crashed, such as Three Arrows Capital. But be aware that buying anything on this list is a bad idea.

Rare exceptions

Right now, on the bitcoin chart, the upper and lower limits of price fluctuations form a large wedge that could end with a bullish rise to the $26-27k level. If that happens, many altcoins could skyrocket by tens or even hundreds of percent.

Of interest are the coins of the decentralized exchanges DYDX, UNI, 1INCH. Large volumes have come in and large investors are likely hoping for growth in these tokens, Podolyan said. The whales on UNI (Uniswap native coin) have been especially strong, buying nearly $100 million worth of tokens in a short time.

The cryptocurrency waves is also worth a look. This altcoin can lag behind the main market, but then “shoot up” very strongly while the whole market “cools down”.

Waiting position

The cryptocurrency market is in a complete bearish trend. Any price impulse in such a situation should only be considered for finding an entry point for a short position or for profit taking.

Since mid-June, bitcoin has been in a “price channel” – a structure on the chart that often marks some pause before further movement within the global trend, in this case a downtrend. The condition for the cryptocurrency to continue falling is the exit from the upper boundary, the collection of liquidity, and the following return. After that, quotations head to the lower boundary and go further to the lower targets. The nearest bitcoin targets are $19.0k and $17.4k.

Negative sentiment in the global market also plays an important role: investors are looking for salvation from recessionary risks in the rising U.S. dollar, the specialist explained. Only the U.S., despite the problems in the economy, can offer stability and rising interest rates.

In the current situation it is extremely risky to buy coins. Now it is better to take a wait-and-see attitude or not to buy anything but BTC and ETH, because they are the only coins that can survive a bear market, which may last for the next two years.

Now you know how to make money in a bear market crypto. But remember that all investment decisions must be balanced.


Bitcoin onchain metric are stronger than ever

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bitcoin onchain metrics

Galaxy Digital analysts published a report that examined key bitcoins onchain metrics (BTC), compared the world’s main cryptocurrency to other asset classes and explained what events could be the catalyst for the coming price rally. The company is confident that the bulls have plenty of reasons to remain optimistic – even despite difficult macroeconomic conditions.

BTC has become the best performing asset of 2023

Bitcoin is the best performing asset in 2023 compared to a lot of stocks, fixed income securities, indices, and commodities. It shows the best or some of the best performance over various time horizons (except for 1 year), and it looks even stronger over the long haul.

In addition, bitcoin’s correlation with the Nasdaq and S&P 500 stock indices has begun to decline, while its correlation with gold, which is considered a classic haven asset, has risen sharply. This happened against the backdrop of the crisis that engulfed U.S. banks and led to the closure of Silicon Valley Bank, Silvergate and Signature.

Given the nature of the current crisis, in which the system of partial bank reserves is tested for strength, the fundamental characteristics of the BTC favorably distinguish it from traditional assets.

Accumulation, not driving price rally speculation

A number of key market indicators indicate that bitcoin’s price rally is driven by the accumulation of coins on the spot, not speculation in the derivatives market. The futures funding indicator has remained virtually unchanged since the beginning of 2023 – meaning that the market is net-neutral regarding speculative positioning. The same can be said about volume and open interest in the CME.

The total number of addresses with non-zero balances also continues to grow rapidly, with more than 45 million wallets holding BTC today. At the same time, most of them have never spent coins, but only received new ones.

The approaching halving will affect the level of inflation in the BTC network

The next bitcoin halving will occur in April 2024 and will cause the network’s inflation rate to fall below 1%. The halving events of 2012, 2016 and 2020 catalyzed a price rally and reached a new all-time high as investor demand for BTC quickly exceeded the declining supply level.

This event will put bitcoin among the most stable assets and make it less susceptible to inflation than gold and silver.

Early we reported that Whales are interested in Litecoin, again.

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Whales are interested in Litecoin, again: will it help LTC price return to the $100 mark

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Litecoin price forecast

In February, Litecoin, albeit briefly, returned to the $100 level for the first time since the collapse of the Terra ecosystem in May 2022. In early March, the price of the asset dipped below the $70 mark again. But that didn’t seem to hinder the whales’ plans, as large holders actively bought LTC during the correction.

Whale activity continues to rise

According to analyst firm IntoTheBlock, the average LTC transaction size increased more than 600% in March 2023, from $13,355 to $81,022.

The increase in average transaction size as the price pulls back signals an influx of large investors looking to buy back the decline in the asset. Given the financial strength of the whales, this could push LTC to another rally in the coming weeks.

Litecoin price forecast – could reach the $110 mark

Santiment’s Market to Realized Value Ratio (MVRV) shows that investors who bought Litecoin in the last 30 days made a 10% profit. According to historical MVRV readings, LTC holders have often captured profits of around 20%. This means that the $100 level is likely to be the next resistance zone.

If the price of the asset can combine above $100, the coin may continue its upward movement towards $115. However, bears can reverse the situation if the LTC falls below $80. With further declines, LTC could fall back below $70.

Early we reported that China intends to work with crypto-businesses through Hong Kong.

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China intends to work with crypto-businesses through Hong Kong

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Banking for crypto-businesses

Hong Kong subsidiaries of major Chinese banks began to provide services for local cryptocurrency firms involved in projects related to Bitcoin, altcoins and various startups. It was reported by Bloomberg, citing sources in the region.

It is alleged that the local branches of Bank of Communications, Bank of China and Shanghai Pudong Development Bank have begun, or are working to provide banking services to crypto-businesses. According to the publication, a representative of an unnamed Chinese bank even visited the office of a crypto firm to promote the services of the financial institution. A top manager of an unnamed large Chinese bank said in a media commentary that banks promote their services in Hong Kong due to the tacit approval of Beijing. The interest in the business is also due to the uncertainty around lending to the local market, they said.

Loyal attitude to the market of cryptocurrencies in Hong Kong has already “bounced back” to local investors with considerable losses. According to calculations by local law enforcement agencies, the region lost over $200 million in 2022 alone. 2,336 cases of crypto-fraud were registered in Hong Kong in 2022.

However, Chinese authorities’ interest is not limited to the crypto market. In early March, the South China Morning Post reported that China intends to stimulate the digitalization of the economy in Hong Kong with its own currency. The authorities are offering citizens a 20% discount for making payments in digital yuan. At the same time, the promotion is valid only for Hong Kong citizens and only in the southern technology center of Shenzhen (connecting China and Hong Kong).

Recall that in the fall of 2022, Hong Kong authorities announced plans to develop a cryptocurrency market in the region. According to the Hong Kong government’s website, the authorities will work with local regulators to create “favorable conditions” for developing the local cryptocurrency industry.

Early we reported that Cryptotraders lost more than $250,000,000 in liquidations after Fed rate hike.

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