Bitcoin and Ethereum: Unusual July Slump
Bitcoin (BTC) and Ether (ETH) – two of the leading lights of the crypto market – appear to be heading for a troubling July, an anomaly considering the historically bullish trend for these digital assets during this month.
Bitcoin, the largest cryptocurrency by market capitalization, has been caught in a month-long lull, marking its fourth straight week of less than 2% price fluctuation. Notably, BTC witnessed a 1.3% decline this week, following a minor 0.3% uptick the previous week. With merely ten days left in the month, the digital asset seems on course for its second losing month in 2023.
On a parallel track, Ethereum's native token, Ether, also exhibited a similar trend, albeit with a wider trading range. This week's 1.63% slide, juxtaposed against the previous week's 3.24% gain, puts Ether on a slippery slope. The digital coin, trading at $1,897 at press time, needs to scale past the $1,934 mark in the next ten days to avert its first losing month of the year.
Interesting Fact: Despite the overall bullish trend of Bitcoin and Ether in July, 2023 appears to be a deviation from this trend.
Interestingly, in the realm of cryptocurrencies with a market cap of over $1 billion, BTC and ETH's performance over the past week landed them in the 26th and 29th positions, respectively.
This week’s spotlight shone on Maker (MKR), a decentralized peer-to-peer lending platform, which emerged as the weekly leader, rallying over 30% over the past seven days and marking an impressive year-to-date surge of more than 120%. XLM, closely correlated to XRP, also shone with a more than 20% rise in the same period, contributing to its 117% gain this year.
Tip: Diversify your portfolio by investing in promising altcoins like MKR and XLM, especially when the market leaders are facing a slowdown.
While XLM topped the currency sector, MKR reigned in the DeFi sector. However, overall performance across the CMI universe was subdued, with DeFi noting a slight increase of 1.3% and the currency sector posting a minor decline of 0.5%. The computing sector stole the show, escalating by 6.4%, chiefly driven by Chainlink (LINK), an oracle network bridging on-chain and off-chain environments.
Investor's gaze next week will largely be fixed on the Federal Reserve's interest rate decision on Wednesday. The widely anticipated move of a 25 basis points increase is echoed by the CME Fedwatch tool, which assigns a probability of 99.8% to the rate hike. Furthermore, Jerome Powell, Chair of the Federal Open Market Committee (FOMC), is likely to reiterate his stance on monetary tightening amid persistent, unacceptably high inflation.
Important: The Federal Reserve's interest rate decision greatly influences global financial markets, including cryptocurrencies.
Frequently Asked Questions
How does this news impact cryptocurrency trading?
The apparent slowdown of BTC and ETH might prompt some traders to reassess their positions. However, considering the historical performance of these digital assets in July, experienced traders might see it as a temporary downturn and an opportunity to buy the dip.
How does the performance of Maker and XLM impact the market?
The rise of Maker and XLM exemplifies the potential of alternative cryptocurrencies (altcoins). This strong performance could lead to greater interest and investment in altcoins, thereby diversifying the market.
What does the anticipated Fed interest rate hike mean for cryptocurrency investors?
An interest rate hike typically strengthens the dollar, which could make digital assets less appealing to investors. However, cryptocurrencies are often viewed as a hedge against inflation, so this decision might further strengthen their appeal.
How can traders prepare for potential ETH and BTC downturns?
Traders should monitor market trends closely and consider diversifying their portfolio. Investing in other promising cryptocurrencies or sectors like DeFi and oracle networks could potentially offset any losses from ETH and BTC.
Remember: Interest rate decisions can cause sudden shifts in the market, and investors should be prepared to respond quickly.
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Gabriel Kowalski
Gabriel Kowalski is an accomplished trader, financial strategist, and an engaging writer. With over 15 years of experience in forex trading, technical analysis, and the broader financial sector, Gabriel's knowledge is both extensive and versatile. He's known for his astute analyses of market trends and his ability to explain complex financial concepts in an approachable way. His areas of specialization include forex trading, market news, and economic trends. Gabriel's primary aim at Investora is to empower readers with the knowledge they need to make informed financial decisions. When he isn't dissecting financial markets, Gabriel enjoys hiking and photography.
