Is the bull market still far off? Three warning signs emerging in the cryptocurrency market

▲ Bitcoin, Cryptocurrency ©

An analysis suggests that the cryptocurrency market is once again showing bearish signals. While the stock market is breaking new records, Bitcoin and major altcoins are losing their rebound momentum amid deteriorating investor sentiment and a shrinking derivatives market.

According to investment media FXStreet on May 14 (local time), the total cryptocurrency market capitalization fell to around $2.61 trillion, the lower bound of the box range formed over the past two weeks, and is currently trading at approximately $2.66 trillion. Although the decline over the last 24 hours has narrowed to about 1%, the market continues to underperform the US stock market. The media analyzed that investors are maintaining a cautious stance ahead of the vote on the US cryptocurrency market structure bill, the CLARITY Act.

The deterioration in market sentiment was also confirmed by figures. The Crypto Fear & Greed Index fell for two consecutive days, dropping from 49 to 34. FXStreet assessed that the weaker performance compared to the stock market and the failure to enter the 'Greed' zone are signs that the current cryptocurrency market is not ready to enter a long-term bull market. Over the past day, Dogecoin (DOGE), Immutable, and Tron (TRX) showed the strongest performance, but their gains were limited. In contrast, Theta, Internet Computer, and TON Coin experienced significant declines.

Bitcoin (BTC) temporarily dipped below $79,000 amid a selling spree that lasted about 6 hours, triggered by the rise in the US Producer Price Index (PPI). Market analysis suggested that signs of re-accelerating inflation are weakening expectations for interest rate cuts by the US Federal Reserve (Fed). However, as the US stock market quickly absorbed the inflation shock, Bitcoin also attempted to recover above $80,000. FXStreet diagnosed that the declining 200-day moving average (MA) continues to act as strong resistance, a signal that the market is still in a bearish phase.

Risk aversion was also detected in the derivatives market. According to CryptoQuant, Bitcoin derivatives open interest on major exchanges recently decreased by approximately $1.25 billion. The media explained that rising inflation is weakening expectations for accommodative monetary policy, thereby also dampening leveraged investment sentiment.

Meanwhile, institutional adoption continues to expand in the market. Financial giant Charles Schwab has launched direct trading services for Bitcoin and Ethereum (ETH) for some individual investors. Additionally, 21Shares launched its first spot ETF based on Hyperliquid, which attracted $1.2 million on its first day of trading. Solana (SOL)'s Alpenglow upgrade has entered the public testing phase for mainnet deployment. FXStreet reported that this upgrade, which increases transaction efficiency by up to 100 times, is likely to be applied to the mainnet in Q3-Q4 this year.

*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. This content should be interpreted for informational purposes only.*