Industry players told CNBC that an improvement in macroeconomic factors, a particular trading pattern and a further shakeout of companies and projects could be the key ingredients needed for the future of the market.
After hitting a record high in November, the value of the entire market has been wiped out.
For the last few weeks, there has been no major catalyst to the upside and traders are trying to figure out where the bottom is.
There are some things that could help the market.
The macroeconomic situation of soaring inflation has caused the U.S. Federal Reserve and other central banks to raise interest rates.
Cryptocurrencies have fallen in tandem with the stock market.
An improving macroeconomic picture could help the market find its feet.
If inflation is under control, the economy is under control, and there is no severe recession, then the market will be stable, according to the co- founder of a hedge fund focused on cryptocurrencies.
The Fed will get more aggressive in its fight to tame rising prices if the June inflation data is anything to go by. There are some signs that it might be peaking.
According to the vice president of corporate development and international at Luno, if there are signs that the economy and inflation are getting under control, that could help the market.
Ayyar said that if we see signs of a bottom this month or over the next few months, it would give more confidence to the market that a bottom is in.
The market could find a bottom if the Fed is softer and the U.S. dollar strengthens. Butterfill said a weaker economic outlook could cause the Fed to slow down.
Butterfill said that a turn around in Fed policy and the peak of the dollar index would help define a true floor.
The amount of leverage in the system has been a key feature of the boom and bust cycle.
There are platforms that promise high yields for retail investors to deposit theircryptocurrencies. Last month, Celsius was forced to pause withdrawals as it faced a shortage of funds. Celsius allows others to pay a high yield and then pocket the profit by lending it out to their friends. The yield Celsius gives to its retail customers is supposed to be paid for by that profit. The business model was put to the test.
3AC, which was known for its bullish bets in the industry, highlighted the issue with excess leverage. 3AC has a lot of counterparties that it has borrowed from.
There are a number of companies that had exposure to 3AC.
Three Arrows Capital is in the process of going out of business.
We don't know if it's complete or not. The market could find a bottom if there are no more surprises with collapsing companies.
Butterfill said that miners could be the next victims of the washout. There will be many unprofitable mining operations because of the pressure on the price ofCryptocurrencies. Butterfill says there have been some mining start-ups that raised funding last and ordered equipment that has not been delivered.
Butterfill told CNBC that a collapse in one of these mining startup or associate lender is likely and would define a trough to thecryptocurrencies market.
Ayyar explained some of the trading patterns that could help define a bottom for the market. He said there could be a capitulation candle where the price of bitcoin drops even further and the last weak hands are wiped out.
The market is ready to go back up if this happens.
He pointed out that this happened in March 2020 when the price of bitcoin fell more than 30% in a single day.
There is a possibility of a second pattern that1-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-6556 is1-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-65561-6556
It is possible that the price of the currency could drop further to between $13,000 and $14,000, which is a 30% drop from Wednesday.
There is a chance that it could be between $13,000 and $15,000. If institutional investors step in, then prices could be supported.
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