Cryptocurrencies are positioning for big price move ahead?

Bitcoin slipped below $20,000 after the weekend, but the bulls are trying their hand again and defending the market from deeper declines. Will demand have enough strength to stave off a bottom at current levels and start the anticipated upward movement?

• Halting deeper declines at the $19,000 levels has once again demonstrated the relative strength of buyers at valuations below $20,000. It seems that only a very negative market event could pull the Bitcoin price well below these levels. 
• Although the market situation is very bumpy and it seems downright unrealistic that positive sentiment toward risky assets will return such circumstances in the past have sometimes been a signal of a dovish bottom. According to Howard Marks, manager of the OakTree fund (more than $150 billion under management), the circumstances we are seeing may cause some of the 'smart money' to begin to conclude that 'it's so bad it can only get better' and start buying again. Adequately, the mechanism also works the other way. When asset valuations fall after massive increases and a lot of positive news - then sellers come to the conclusion that 'it's so good that it can only get worse' . This illustrates the psychology behind volatility and exaggerated market reactions;
• Cryptocurrencies are affected by many factors related to the situation and sentiment in the broad market from stocks to bonds to central bank decisions. Today's U.S. CPI inflation reading could introduce heightened volatility into the markets. A reading below analysts' expectations could be viewed positively by markets and rally a change in the Fed's aggressive policy of hikes, probably starting in September - a 75bp hike in July seems base even in the face of falling inflation;
• Tomorrow we will learn results from the US banking sector, presented by JP Morgan and Morgan Stanley. The banks' results, combined with analyst statements and assumptions for the rest of the year, could inject heightened volatility into markets - including cryptocurrencies, which would likely welcome the return of a stronger Wall Street after weaker Q1 2022 quarterly results;
• Vasil's hard fork of the Cardano test network went almost unnoticed in terms of cryptocurrency valuations, confirming the winter sentiment in the crypto market. At the same time, however, the network appears to be just ahead of a milestone in its development, which could potentially help it stay at the forefront of the market when cryptocurrency market growth returns. Currently, Cardano's capitalization is around $14 billion compared to Ethereum's more than $120 billion, although transactions on the Cardano network are cheaper and the network is better scalable. The network has recently recorded record numbers of smart contracts processed, approaching 3,000. 

The number of smart contracts processed on the Cardano network is growing exponentially. Source: Cardano Blockchain Insights

• At the same time, however, Cardano is struggling with the network effect, which favors the ETH network which continues to attract more interest from developers, clients and institutions;
• Weak quarterly results from U.S. companies and still rising inflation could prove to be another 'slide' not only for indexes like the NASDAQ but also for other risky assets including Bitcoin, Ethereum and smaller altcoins. 
• The current valuations of Bitcoin and many other cryptocurrencies, some of which have lost as much as 90% from their peaks, could prove very attractive to many bulls if Wall Street's earnings season runs above analysts' expectations and the Fed begins to slow monetary tightening. We may then see a very dynamic rebound associated with the rapid return of many investors who left the market as a result of the phenomenon commonly known in the crypto industry as FOMO i.e.''fear of missing an opportunity''.

Bitcoin chart, H4 interval. The major cryptocurrency has been moving in a sideways trend since it scored a bottom below $18,000. At the same time, it has managed to gain nearly 10% since the price bottom. We are also seeing higher and higher lows, which may herald an upcoming rebound. On the other hand, above $22,000 a very strong supply has been triggered twice. The short-term picture of the chart looks mixed. Similar situations in the past have heralded a very large price movement in either direction which will further coincide with the upcoming macro readings from the US economy and the earnings season on Wall Street. Source: xStation5