Macro crypto currency market outlook

Bitcoin remains confined to a well-defined downtrend off the record high from November 2021. At this stage, any rallies are classified as corrective, with a lower top sought out ahead of the next downside extension targeting $14,000, which also coincides with massive previous resistance turned support in the form of the previous high from 2019. A break back above $32,385 would now be required to take the immediate pressure off the downside.

The month of June was not a pretty one for crypto assets. In fact, it was one of the worst months of performance in years. Bitcoin was down well over 35%, while ether was hit even harder, down some 45%. Year-to-date, bitcoin is down some 57% against the US Dollar, while ether is down a whopping 70%.

The driving force behind the weakness was fallout in traditional markets, with traders heading for the exits as inflation continued to rocket higher, forcing less investor friendly monetary policy. Of course, there was also plenty of fallout with the crypto space as well, highlighted by the implosions at Celsius Network and Three Arrows Capital. A lot of this a result of contagion from the Terra collapse several weeks back.

Looking ahead, we continue to see risk for additional downside on account of the global economic outlook and prospect that higher inflation and slower growth will lead to more of a shakeup in risk assets, which will open more downside pressure in crypto. At the same time, we also believe we are getting closer to levels where the longer-term value proposition of crypto will be too difficult to ignore at such discounted prices. Below the respective yearly lows in bitcoin and ether are next key support levels at $14,000 and $700 respectively. We think additional setbacks beyond these levels should be short-lived.