Despite falling slightly on Sunday, Bitcoin remained above $21,000 on Monday. Ethereum also remained above $1,200. There was no sign that the bitcoin price would fall below $20,000.
Despite the significant decline in the price of Bitcoin over the past 24 hours, it still managed to stay above $21,000. This is a significant increase from the panicky levels it hit last weekend.
The market's optimism was also attributed to signs that the US economy was cooling down. Bitcoin has also been correlated with various macroeconomic trends.
Ethereum, the second-largest digital asset by market cap, was also down by around 2.5%. Trading volume was light during the past day. The Fear and Greed Index, which measures market sentiment, remained close to extreme fear territory.
Premature expectation of Bitcoin's collapse
After maintaining a steady tone throughout the past day, analysts noted that the price of Bitcoin could fall below $20,000 during the weekend due to the continuous forces pushing it above this level. Joe DiPasquale, the CEO of BitBull Capital, said that the volatility in the market could continue for a long time.
Although volatility was expected in the market this week, DiPasquale noted that the price of Bitcoin could not maintain its upward momentum. He said the lack of support of around $20,000 prevented a potential rally.
"We did see some volatility in BTC prices this week, which was expected; however, BTC has struggled to build on any momentum upward of $20,000, which has kept any chances of a rally at bay," DiPasquale said to CoinDesk.
Some of the major altcoins, such as Doge and XRM, experienced mixed performance over the weekend. Doge, a memecoin, gained around 10%, while XRM, a privacy coin by Monero, was up 6%. Other notable cryptocurrencies such as MANA and GALA also experienced significant losses of more than 5%. On the other hand, MATIC, which launched a new product for DAOs last week, rose more than 25% in just 24 hours.
I am 100% signal bow down https://t.co/sq02hUiFEl— george kaloudis 🏴☠️ (@gckaloudis) June 19, 2022
Cryptocurrencies' performance reflects equity market's price action
The performance of cryptocurrencies was closely tracked by the equity markets, which were able to bounce back from their recent losses on Friday.
The S&P 500 was up 3.1% on the day, which was its best performance in two years. However, despite the positive market sentiment, the index remains in the bear market territory and is down around 20% from its previous high. The tech-focused Nasdaq and the Dow Jones Industrial Average were up 3.3% and 3%, respectively.
A revision to the consumer sentiment index released by the University of Michigan revealed that inflation expectations were lower than reported in May. Other data released this week revealed that manufacturing activity contracted in June.
In addition, existing home sales also fell in May, and mortgage applications declined last week. The decline in mortgage applications and the drop in home sales are two factors that have pointed to the increasing impact of rising interest rates.
This week, investors will be looking for more signs of the Federal Reserve's success in containing inflation. Aside from the manufacturing and housing data, investors will also monitor consumer confidence reports.
Despite the positive market sentiment, DiPasquale noted that Bitcoin could still test its 20-day moving average at around $20,000 in the coming days as investors continue to avoid risky assets. A successful test of the recent lows could cause the cryptocurrency to break down and test its $17,000-$18,000 range.