06.07.202214:29 Forex Analysis & Reviews: Bitcoin dumps leverage and speculative investors

Bitcoin is starting a new stabilization phase after the biggest sell-off in recent years. Sellers are weakening because they failed to break through the support of $19,000. Buyers and long-term investors are actively buying spare volumes of BTC, bringing the monthly outflow of coins from exchanges to 0.32% of the total number of BTC in the market. However, bulls do not manage to achieve a full advantage. As a result, there is a situation in which sellers can no longer drop the price, and buyers have not accumulated enough volume to start an uptrend.

Fear of market participants is the main reason why bitcoin cannot start a full-fledged uptrend. The Fear and Greed Index is still hovers at fear levels, and the recent sell-off is still fresh in investors' minds. Despite the decidedly record-breaking loss taking and other negative consequences of the worst bear market, the panic in late June was a healing one. According to Glassnode's research, only long-term investors remained in the cryptocurrency market. Almost all speculative investors left the market and sold their coins.

JPMorgan experts expressed a similar opinion. They noted a decrease in the share of borrowed funds in the market, indicating a decrease in the volume of margin trading, which negatively affected the market due to large borrowings. According to the bank, the reduction of trader activity had a positive impact on the cryptocurrency market and we should expect an improvement in market sentiment.

In addition, reduced speculation will have a positive impact on the volatility of the main digital asset. In the long term, this means that market participants are unlikely to panic about negative fundamental news. Notably, reduced trading activity and speculation may help avoid market turmoils, which large investors deliberately provoke. In other words, the market has got rid of the deadweight that was hampering the cryptocurrency's uptrend.

However, this does not indicate that a full-fledged uptrend may start soon. Glassnode and CryptoQuant are recording massive migrations of BTC coins from crypto exchanges but they are incomparable to the volumes that filled the market in mid-June. Despite the unstable situation, we see that coins continue to inflow to cryptocurrency exchanges.

At the same time, the number of active addresses remains at about 850,000, which is clearly insufficient with the current market BTC volumes. The number of daily transactions also remains low, indicating a lack of demand. However, it is important to understand that the cryptocurrency market has over $11 billion in stablecoin, and this figure is not decreasing. This suggests that the market is not confident in the formation of a local bottom at $17,700. We did not see a massive buyback and the formation of a corresponding pattern typical of a buy-the-dip trend.

As a result, the market has dumped speculative and borrowed funds but is not ready for full upward movement. Technical indicators also hint that flat trading persists and buying activity remains weak. We see active accumulation, which is enough to keep BTC/USD quotes in one price range, but not enough to form a long-term uptrend.