Because the futures premium and other fundamentals show no stress indications, traders remain optimistic about the BTC price. The price of Bitcoin fell below $40,000 for the first time in 110 days on Jan. 10, which served as a wake-up call to leveraged traders. Long (buy) futures contracts worth $1.9 billion were liquidated that week. It caused dealers’ morale to plummet.
The crypto “Fear & Greed” index, which swings from 0 to 100, reached ten on Jan. 10, the lowest level since the March 2020 crisis. The indicator uses historical volatility, market momentum, volume, Bitcoin dominance, and social media to gauge trader mood.
Currently, investors appear to be absorbing this week’s economic data, which reveals that retail sales in the United States fell by 1.9 percent in December 2021 compared to the previous month.
Investors should be concerned about stagflation, which occurs when inflation rises despite a lack of economic development. Even if this indicates that Bitcoin’s digital scarcity is a beneficial trait, markets will still seek refuge in whatever asset is deemed secure in the long run. As a result, the initial wave may be harmful to cryptocurrencies.
Bitcoin’s price has remained unchanged for the previous seven days, trailing the altcoin market’s 7% increase. Layer-1 decentralized application platforms might explain part of this unexpected movement like Fantom (FTM), Cardano (ADA), Near protocol, and Harmony doing well.
The weakest performer of the week was Loopring (LRC), a zkRollup open protocol for decentralized exchanges on Ethereum. The protocol’s DEX volume peaked at $30 million per day in early December 2021 but is presently hovering around $6 million. Dfinity (ICP) and Chainlink (LINK) are adjusting following a 40% or greater gain in the first ten days of 2022.
The OKEx Tether (USDT) premium or discount measures the difference between China-based peer-to-peer (P2P) trading and the official US currency. Excessive demand for bitcoin investments can be shown in figures that surpass 100%. A 5% discount, on the other hand, usually indicates that there has been a significant amount of selling activity.
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