Cryptocurrency markets have lost $50 billion.
A weakening dollar and midterm elections could be beneficial.
On-chain data indicate that BTC is in a capitulation zone.
falling from its weekend highs. Meanwhile, analysts debate whether the situation is improving or deteriorating.
Crypto markets have tumbled by roughly $50 billion since their weekend highs of just over $1.1 trillion. The market cap has dropped about 3% on the day, and prices are falling further at the time of writing.
Resistance is proving too strong to overcome, and the bear market is continuing. Market observers and analysts are finding evidence for both rebound and capitulation scenarios.
A Case for the Recovery of the Crypto Market
In a tweet on Nov. 7, Cumberland crypto liquidity service claimed "a fledgling surge is taking shape in crypto." The company took advantage of a dropping US dollar and an improving macroeconomic environment. Cumberland also stated that today's midterm elections in the United States might be bullish.
They observed that the greenback's rise looks to have peaked. This is fantastic news because the strong dollar has crushed sentiment in every major risk asset class, including commodities and cryptocurrency.
Furthermore, the macroeconomic uncertainty caused by Russia's conflict in Ukraine looks to have reached a "choppy equilibrium."
Furthermore, cryptocurrency has been a source of concern for a new breed of tech-savvy "crypto voters" in the midterm elections. Cumberland highlighted that a Republican victory may usher in an era of increased stimulus and less regulation.
Finally, despite the falling token values, crypto has seen widespread adoption. “As we've seen in previous cycles, compelling adoption tales can trigger parabolic rallies,” it concluded.
Not so fast...
Although crypto markets are fundamentally robust, on-chain data depict a different picture. Charles Edwards, the founder of Capriole Fund, shared data with a bleaker forecast on November 8.
It shows that Bitcoin's unrealized profit and loss indicator has reached the point of no return for long-term investors: “We have entered the capitulation value zone (red), which has only occurred once every four years in the past.”
On-chain bottom indicators are all flashing, and the charts closely mimic previous bear market lows. Furthermore, several industry professionals, including as Tezos co-founder Kathleen Breitman, believe that the current crypto winter will worsen.
Meanwhile, analytics firm Glassnode stated that held and lost BTC reached a record high last week after aggressive accumulation.
Read also: Crypto Daily Roundup, 28 Sep: The Latest News in the World of Crypto
