GB Market Commentary 12/07/2022
by Nick Heale
The Bitcoin price remains in a tight trading range at $19,742 at the time of writing. It has been like this for all of July and has left traders scratching their heads as to when the next meaningful move to the upside or downside will be in the largest cryptocurrency.
It is a crucial week for financial markets headlined by the CPI YoY inflation numbers in the US on Wednesday which came in at 8.6% last month. Bulls will be hoping for some relief in the measure due to evidence that commodity prices could finally be coming down however this may take some time to play out.
The strength of the US dollar indicated by DXY, which measures the strength of the US dollar relative to six other foreign currencies, is at a 20-year high. Indeed, the US dollar is currently at parity with the Euro indicating the degree of fear in the financial markets generally as traders are fleeing to the US dollar haven.
It is indeed surprising that Bitcoin has remained range bound for such a long period considering the geopolitical and macro-economic factors at large. In China, we have heard reports of bank runs due to depositor’s accounts being frozen, a default of Sri Lanka, not to mention the ongoing war in Ukraine and escalation of Covid measures in China which will continue to impact the supply chain.
Considering the above it's understandable that Bitcoin remains technically oversold despite the fundamentals for a decentralised asset remaining intact.
In altcoin news, Polygon’s MATIC token deserves a special mention today. It has not been spared from the recent sell offs falling 80% from its all-time high of $2.87 in December. However, to evidence the recent volatility it is now 70% higher than its most recent low in June this year.
Whilst MATIC polarises opinion in cryptocurrency circles, its level of adoption cannot be questioned, and it has benefitted from Terra Luna’s unfortunate demise by enticing 48 projects to move over to it. It has also recently announced a tie up with the social forum Reddit allowing users to purchase blockchain based avatars for their profile.