Trading Firms Blame Lack of Bullish Catalyst for Market Swoon

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Trading Firms Blame Lack of Bullish Catalyst for Market Swoon as Ether and Bitcoin Fall

One observer remarked that ETH deposits to exchanges had yet to decline. Prior to last Thursday’s Ethereum Merge, investors began transferring coins to exchanges

The cryptocurrency market has started the week on a down note, with leading coins bitcoin (BTC) and ether (ETH) reaching multi-month lows. Traders believe the market is running out of positive catalysts now that the Ethereum Merge is over.

According to CoinDesk data, Bitcoin, the largest cryptocurrency by market value, has dropped below $18,300, its lowest price since June 19. Meanwhile, ether, the native currency of the Ethereum blockchain, fell to a two-month low of $1,580 after undergoing a long-awaited software update known as the Merge last week. The whole cryptocurrency market capitalization has dropped to $858 billion, the lowest level since mid-July.

“Bullish catalysts for crypto are now relatively limited, and we could see ETH testing yearly lows in the coming months,” said Matthew Dibb, chief operating officer and co-founder of Singapore-based Stack Funds, referring to ether’s post-Merge “sell-the-fact activity.” The Merge took place on Thursday.

“All we really need to look at is the appreciation in the dollar index to understand the attitude in risk assets… and it doesn’t seem good,” Dibb remarked.

The dollar index, or DXY, recovered to 110.00 last week, reversing the previous week’s fall after a stronger-than-expected US inflation report demolished the ‘Fed pivot’ narrative, reinforcing bets on continuing aggressive rate hikes.

According to Brian Cubellis, a research analyst at Coinbase Institutional, crypto native hedge funds swiftly “derisked” positions in BTC and ETH following the inflation data.

According to Laurent Kssis, crypto trading consultant at London-based CEC Capital, bearish flows continue to dominate.

“Fresh shorts, particularly in derivatives, are being pushed through centralized exchanges,” Kssis told CoinDesk. “This comes ahead of the Fed’s decision later this week, when the central bank is likely to raise rates by 75 basis points, but a 100 basis point increase is still possible.”


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Author: Sara Brooks