Inflation

Fighting the crypto winter and token protocol inflation in 2022

Where can one safely store digital assets, earn crypto rewards and trade coins intermittently, while the market continues to see a sea of red?

There is an old saying, “cash is king,” but if it is sitting in a bank account or, in the case of crypto — a wallet, it diminishes daily due to inflation. This is especially the case now as inflation in the United States breaks its 40-year record. While the dollar-cost-averaging (DCA) strategy allows an investor to minimize the effects of volatility by purchasing an unstable asset in time intervals, inflation still causes a decrease in a target asset’s value over time. 

For instance, Solana (SOL) has a pre-set protocol inflation rate of 8%, and if the yield is not generated through farming or utilizing decentralized finance (DeFi), one’s holdings are depreciating at a rate of 8% per year.

However, despite the U.S. Dollar Index (DXY) increasing by 17.3% in a year, as of July 13, 2022, the hopes of receiving significant returns in the bull market are still pushing investors to engage with volatile assets.

In the upcoming “Blockchain Adoption and Use Cases: Finding Solutions in Surprising Ways” report, Cointelegraph Research will dig deeper into different solutions that will help to resist inflation in the bear market.

Download and purchase reports on the Cointelegraph Research Terminal.

Crypto winter is a period where anxiety, panic and depression start to burden investors. However, many crypto cycles have proven that real value capture can be attained during a bear market. For many, the current sentiment is that “buying and holding,” combined with DCA, may be one of the best investment strategies during a crypto winter.

In most cases, investors abstain from outright investment and amass capital to purchase assets when the macro condition improves. However, timing the market is challenging and is only feasible for active daily traders. In contrast, the average retail investor carries higher risks and is more vulnerable to losses coming from rapid market changes.

Where to go?

In the midst of various calamities in the crypto universe, placing assets in staking nodes on-chain, locking in liquidity pools or generating yield through centralized exchanges all come with a hefty amount of risk. Given those uncertainties, the big question remains whether it’s best to just buy and hodl.

Anchor Protocol, Celsius and other yield platforms have recently demonstrated that if the foundation of yield generation is poorly backed by the tokenomics model or the platform’s investment decisions, too-good-to-be-true yields may be replaced by a wave of liquidations. Generating yield on idle digital assets via centralized or decentralized finance protocols with robust risk management, liquid rewards and yield offerings that are not too aggressive is probably the least risky pathway for fighting inflation.

Both DeFi and centralized finance (CeFi) protocols can offer varying levels of yields for identical digital assets. With DeFi protocols, the risk of lock-ups to generate marginal yield is yet another major factor, as it limits an investor’s ability to react quickly should the market adversely change. Moreover, strategies may carry additional risks. For instance, Lido liquid staking with stETH derivative contracts is vulnerable to price divergence from the underlying asset. 

Although CeFi such as Gemini and Coinbase, unlike multiple other such platforms, have demonstrated prudent user fund management with transparency, yield offerings on digital assets are insignificant. While staying within the risk management framework and not taking aggressive risks with the user’s funds is beneficial, the returns are relatively low.

While keeping a buying discipline within the DCA framework and doing research are crucial, finding a low-risk solution generating substantial yields may be tricky. Meanwhile, a new crypto market cycle is set to bring developments that will hopefully bring novel solutions, attractive in both risk and returns. Cointelegraph Research evaluates multiple platforms and assesses the sustainability of current DeFi and CeFi yields in its upcoming report.

This article is for information purposes only and represents neither investment advice nor an investment analysis or an invitation to buy or sell financial instruments. Specifically, the document does not serve as a substitute for individual investment or other advice.

Bitcoin tanks on highest CPI data since 1981 as BTC price dips under $19K

U.S. inflation comes in a full 0.3% higher than expected, causing a dollar strength spike and the euro to fall below parity with USD.

Bitcoin (BTC) fell $800 in minutes on July 13 as the latest United States Consumer Price Index (CPI) data came in far ahead of estimates.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Dollar smashes new 20-year highs on hot CPI

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it dived under $19,000 minutes after the June CPI print, which put U.S. inflation at 9.1%.

Expectations had favored 8.8% CPI year-on-year, this still being the highest reading since the start of the 1980s.

Consumer Price Index (CPI) chart (screenshot). Source: Bureau of Labor Statistics

With inflation all but guaranteeing further rate hikes from the Federal Reserve, the mood among risk assets — including crypto — swiftly turned sour.

“Peak inflation is here with CPI coming in at 9.1%,” Cointelegraph contributor Michaël van de Poppe reacted, adding that $19,500 should have held for BTC/USD to avoid “cascading south some more.”

U.S. dollar Index (DXY) 1-hour candle chart. Source: TradingView

The knock-on effect of the CPI numbers was also seen in the U.S. dollar. After the release, the U.S. dollar index (DXY) spiked to new twenty-year highs, forcing the euro below parity as a result.

“Only 12 out of the last 110 years had inflation above 9%,” Charles Edwards, CEO of crypto asset manager Capriole, continued.

“If inflation was still calculated the same as it was four decades ago, today’s reading would likely dwarf the others.”

At the time of writing, BTC/USD traded back above $19,000, with volatility set to continue into the start of trading on Wall Street.

ETH price back targeting three figures

Altcoins, already falling in line with BTC prior to the CPI event, also gave up recent gains.

Related: Ethereum price risks ‘bear flag’ breakdown, 20% drop against Bitcoin

Conspicuous was Ether (ETH), which threatened to go below $1,000 for the first time since June 30.

ETH/USD 1-hour candle chart (Binance). Source: TradingView

Other coins in the top ten cryptocurrencies by market cap were down 3%–4% on the day, practically all of the losses coming after the data release.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin circles $20K pre CPI amid warning Fed risks ‘blowing up’ economy

“Highly elevated” CPI numbers due in hours as one theory suggests that there is already no more room for Fed rate hikes.

Bitcoin (BTC) rebounded from overnight lows on July 13 as markets nervously waited for United States inflation data.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Countdown to “highly elevated” inflation reveal

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD climbing from $19,250 to $19,900 at the time of writing, up 3.3% on the day.

With three hours to go until the release of Consumer Price Index (CPI) data for June, crypto markets showed little sign of advance volatility.

Previously, the U.S. government had warned that the CPI figures were expected to be “highly elevated,” with unofficial projections from other sources indicating a year-on-year inflation increase of nearly 9%.

“CPI coming out at 8.8% today. Watch. I’ve got a strong feeling this is the number,” popular crypto YouTuber Ben Armstrong agreed.

Biding its time meanwhile was the U.S. dollar index (DXY), which lingered at just above 108 after a corrective move from fresh twenty-year highs.

U.S. dollar Index (DXY) 1-hour candle chart. Source: TradingView

Analyzing the potential for the Federal Reserve to continue interest rate hikes to tame inflation, meanwhile, one analyst argued that there was already little, if any, room for maneuver.

“We are at the point where the fed would usually halt rate hikes and begin easing again,” Reddit and Twitter user TheHappyHawaiian explained:

“As they gear up for 75bp in a couple weeks, they would be knowingly blowing up the system.”

An accompanying Fed Pivot Indicator chart showed Fed rate direction change over the past thirty-three years and suggested that hikes had already hit their maximum allowed levels.

Fed Pivot Indicator chart. Source: @TheHappyHawaiian/ Twitter

Trader highlights $22,000 importance

Altcoins were somewhat predictably in lockstep with BTC ahead of the inflation numbers.

Related: Ethereum price risks ‘bear flag’ breakdown, 20% drop against Bitcoin

Ether (ETH), after losing 8% the day prior, circled $1,075 at the time of writing, still down 6.3% over the past seven days.

ETH/USD 1-hour candle chart (Binance). Source: TradingView

Other tokens in the top ten cryptocurrencies by market cap were static on daily timeframes.

For Cointelegraph contributor Michaël van de Poppe, however, there was still reason to believe that selling pressure was circumstantial rather than a longer-term trend.

“Yes, the markets should have been correcting, but right now, the valuations of crypto and Bitcoin are way lower than what they should be, due to forced selling from 3AC, $LUNA, and more,” he argued:

“That’s why a break through $22K is going to accelerate the price to $30K as well.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin price hits 7-day low as US warns of ‘highly elevated’ CPI data

Crypto market jitters around inflation expand with Bitcoin and Ethereum dropping to levels not seen since last week.

Bitcoin (BTC) carried through threats of new local lows on July 12 as the White House warned of “highly elevated” inflation.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

White House warns ahead of “decisive day”

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD approaching $19,500 prior to the Wall Street open, down over 4% on the day.

Having failed to hold $20,300 support, the pair appeared to react badly to comments on the inflation outlook from White House press secretary Karine Jean-Pierre.

Markets were already primed for higher than expected figures for June from the Consumer Price Index (CPI), which made new forty-year highs in May.

“So on Wednesday, we will have new CPI inflation data, and we expect the headline number, which includes gas and food, to be highly elevated, mainly because gas prices were so elevated in June,” she told reporters at a press briefing July 11.

The trip to $19,520 meanwhile marked Bitcoin’s lowest levels in a week.

“Tomorrow is going to be decisive,” Cointelegraph contributor Michaël van de Poppe told Twitter followers.

He added that the worst of the reaction should come before the CPI data release, but that the U.S. dollar index (DXY), itself at its highest in two decades, remained a source of interest.

“Honestly saying, “sell the rumor, buy the news” seems to be an implication,” the tweet continued.

“Charts to watch tomorrow: $DXY and the yields on the government bonds + reaction on Brent oil.”

Particularly high inflation risks losses across risk assets due to the associated risk of central bank monetary tightening to tame it, as is already being seen in the U.S. DXY, as Cointelegraph reported, often makes decisive moves upward in times of financial weakness.

DXY stood at 108.47 at the time of writing, having spiked higher into the new week to reach its strongest levels since October 2002.

U.S. dollar Index (DXY) 1-month candle chart. Source: TradingView

“Not interested into longs going into CPI tomorrow, personally looking at a regain of $20.3K and/or $19.3–19.5K region,” Van de Poppe added about potential plans to trade the upcoming turbulence.

Ethereum price sheds 8%

On altcoins, daily losses trended over 5%, but the top ten cryptocurrencies by market cap were led by Ether (ETH), down 8% in 24 hours.

Related: Price analysis 7/11: BTC, ETH, BNB, XRP, ADA, SOL, DOGE, DOT, SHIB, AVAX

ETH/USD traded at $1,060 at the time of writing, approaching daily support levels in place since mid-June

“If things stay the same and Altcoins continue to struggle to breach key resistances… Altcoins may need to experience at least an extra -30% of downside,” popular trader and analyst Rekt Capital commented at the start of the week.

ETH/USD 1-day candle chart (Bitstamp). Source: TradingView

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin risks new lows as $20K looms amid dollar euro parity

Support is thin on the ground, analysts and traders warn, as ex-BitMEX CEO Arthur Hayes heralds the start of the fiat currency “doom loop” with USD/EUR parity.

Bitcoin (BTC) headed for $20,000 after the July 11 Wall Street open amid fresh warnings to “prepare for new lows.”

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

$20,300 eyed as next support zone to hold

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD failing to recover losses that had immediately followed the weekly close at $20,850.

The pair had nonetheless locked in its best week’s gains since March, these nonetheless apt to unravel as market uncertainty lingered.

For on-chain analytics resource Material Indicators, the level to watch was a trendline acting as support since June.

“BTC fell back below the 21-ay Moving Average after the Sunday close,” it wrote in a summation-like Twitter post alongside a heatmap of buy and sell interest on major exchange Binance.

“FireCharts shows some bid liquidity in close range, but it may not be enough. If price falls below the trend line, prepare for new lows.”

BTC/USD order book data (Binance) with trend line. Source: Material Indicators/ Twitter

Others predictably focused on the July 13 United States Consumer Price Index (CPI) data release, this tipped to spark downside across risk assets should June’s inflation significantly outpace estimates.

Blockware analyst Joe Burnett additionally highlighted the potential for miners, already facing tight margins, to capitulate more heavily should BTC price action beat its prior lows.

“Crucial support now around $20.3K. Has to hold and, if the markets does, new highs pos,” Cointelegraph contributor Michaël van de Poppe nonetheless countered.

Hayes sees start of fiat “doom loop”

Macro takes were hardly any more optimistic. For Arthur Hayes, former CEO of derivatives trading platform BitMEX, confirmation was in that at least the U.S. dollar and the euro were beginning a “doom loop” to oblivion thanks to hitting parity.

Related: US inflation data will be ‘messy’ — 5 things to know in Bitcoin this week

Central banks would now have no option but to adopt yield curve control (YCC), sparking the disintegration of the currency which could ultimately leave Bitcoin on top as the new global standard — a prediction previously laid out in a blog post in April.

“$1 = 1€. Foreign currencies crashing against the dollar. And US dollar losing purchasing power fast (CPI est. 8.8%),” PlanB, creator of the Stock-to-Flow Bitcoin price models, added.

“When money dies .. again.”

The U.S. dollar index (DXY) continued its unrelenting surge higher on the day as the European gas crisis pressured the euro, hitting nearly 108.2 — a new twenty-year high.

U.S. dollar Index (DXY) 1-month candle chart. Source: TradingView

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

US inflation data will be ‘messy’ — 5 things to know in Bitcoin this week

A potent combination of CPI figures and more make for a problematic week as Bitcoin price struggles.

Bitcoin (BTC) starts another week in a precarious position near $20,000 ahead of fresh macro upheaval.

After admittedly sealing its best week’s gains since March, the largest cryptocurrency is struggling to hold onto its recently-reclaimed levels.

Major resistance zones remain overhead, and with inflation data due for release later in the week, the coming days could prove unnerving for risk assets everywhere.

At the same time, crypto market sentiment is showing signs of recovery, and on-chain metrics continue to underscore what should be Bitcoin’s latest macro price bottom. 

With conflicting data everywhere, Cointelegraph takes a deeper look at potential market-moving factors for the week ahead.

200-week moving average causes headaches

At around $20,850, the June 10 weekly close was hardly anything special for BTC/USD, but the pair still managed its best seven days’ growth in several months.

Ending Sunday a full $1,600 higher than its position at the start of the week, Bitcoin thus sealed progress not seen since March.

The success did not last, however, as the hours following the weekly close turned negative. At the time of writing, BTC/USD was targeting $20,400, data from Cointelegraph Markets Pro and TradingView showed.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Bitcoin’s ability to hold current levels could be key in deciding the mood this ummer, as relief on global equities would provide an opportunity for crypto to erase some of its losses from recent months.

Commentators including trading suite Decentrader thus eyed the weekly chart with interest.

Others were less enthusiastic, noting that BTC/USD had still performed another close below the essential 200-week moving average (WMA) at around $22,500.

In previous bear markets, the 200 WMA acted as a general support level, with Bitcoin wicking below it briefly to put in macro bottoms. This time, however, appears to be different, as $22,500 has been absent from the chart for a month.

Zooming out, meanwhile, popular trader TechDev advocated a more optimistic outlook for the rest of 2022.

By the end of the year, he argued at the weekend, a reclaim of further important WMAs should result in Bitcoin ending its “reaccumulation phase” altogether.

“BTC flipping 32-35K likely confirms end of reaccumulation and this year+ correction,” TechDev told Twitter followers

“Most probable to occur imo once both 100W and 50W EMAs are in this range. 100W currently at 34.8K and 50W at 37.2K.”

Elsewhere, continued asset liquidation from embattled crypto lending platform Celsius added to selling pressure.

Relentless dollar is back as Asia markets dip

Asian stocks trended down on July 11 as the start to the macro week was clouded by news of social unrest in China.

As protesters demanded the release of frozen funds amid a scandal involving both banking officials and local authorities accused of abusing COVID-19 tracking apps, markets felt the strain.

At the time of writing, the Shanghai Composite Index traded down 1.5%, while Hong Kong’s Hang Seng was 3.1% lower.

Europe fared somewhat better with modest growth for the FTSE 100 and Germany’s DAX, with the United States still to open.

Prior to Wall Street returning, however, the U.S. dollar index (DXY) was already making fresh strides higher, canceling out a retracement that had provided a cooler end to last week.

DXY was at 107.4 on July 11, just 0.4 points off twenty-year highs seen days prior.

Analyzing the situation, one analyst at trading firm The Rock described DXY as “about as extreme as it gets” in terms of year-to-date growth.

“Based on the extreme rally so far this year, the DXY is now up 16% year on year,” he wrote:

“This is about as extreme as it gets historically speaking and, unfortunately, it typically coincides with major financial stress in markets, a recession, or both.”

Bitcoin managed to buck its traditional inverse correlation to DXY last week, climbing in tandem with the index.

U.S. dollar index (DXY) 1-day candle chart. Source: TradingView

Inflation tipped to provide “messy week”

If that weren’t enough, the age-old topic of inflation is apt to provide a further test of market resilience this week.

The U.S. Consumer Price Index (CPI) readout for June is due July 13, and expectations are for the monthly figure to be even higher year-on-year.

The higher inflation, and the more it diverges from those already high expectations, the more risk assets tend to react in anticipation of a reaction from policymakers.

For macro analyst Alex Krueger, the likely trajectory for this week is thus clear.

“Going to be messy,” he summarized on Twitter.

CPI, while stripping out many of the leading inflation indicators, even caught the attention of mainstream commentators over the weekend in a grim hint that this week’s figures could put the cat among the pigeons.

“As next week’s US CPI inflation print may get very close to 9%, some will be quick to point out that this measure is backward-looking,” economist Mohamed El-Erian reacted:

“Yes…but it Captures the pain that many are feeling, particularly the less fortunate segments of society; and Influences inflation expectations.”

Any knee-jerk reaction, meanwhile, could definitively spook Bitcoin markets in line with other risk assets, or at least spark major volatility, as seen during previous CPI events.

MACD hints at price bottom in progress

With multiple Bitcoin price metrics either flashing “bottom” or even hitting all-time lows, the space is not short of signals suggesting a BTC investment at current prices has a historically unrivaled risk/reward ratio.

This week, the latest metric to join the herd is the moving average convergence/divergence (MACD) on the weekly chart.

MACD effectively tracks a chart trend already playing out. It involves subtracting the 26-period exponential moving average (EMA) from the 12-period EMA.

When the resulting value is below zero, Bitcoin tends to be in a bottoming scenario, meaning that the recent trip to $17,600 could be so too should historical norms repeat.

Commentator Matthew Hyland, meanwhile, noted a similar MACD structure still playing out on the 3-day chart.

“3-Day MACD is still on a bullish cross,” market analyst Kevin Svenson added:

“Despite the pullback, I remain bullish here for the medium term.”

As Cointelegraph recently reported, Bitcoin’s relative strength index (RSI) is already at its most “oversold” levels in history.

Last week, meanwhile, one trader called July 15 as the key date by which another chart feature will call the bottom, this one composed of two separate MAs.

2-month highs for Crypto Fear & Greed Index

As a modest silver lining, the average crypto investor is slowly getting their confidence back, the latest data suggests.

Related: Top 5 cryptocurrencies to watch this week: BTC, UNI, ICP, AAVE, QNT

Building on previous strength, crypto market sentiment hit its highest levels since early May over the weekend and is now at 22/100.

While still in “extreme fear” territory, the Crypto Fear & Greed Index’s renaissance provides a clear contrast to the events of the past two months, during which it dipped as low as 8/100 — below even some previous bear market bottoms.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Key Bitcoin chart ‘will confirm bottom is in’ by July 15, says trader

It’s all about two moving averages crossing over as proof that BTC price action is done with the dip.

Bitcoin (BTC) is due to give a definitive signal that a macro bottom is in this month, one analyst has concluded.

In a Twitter thread on July 6, popular commentator Wolf eyed key moving average data as proof that BTC price action will not be going lower.

Key chart crossover eyed as end to bear market losses

Amid repeated calls for BTC/USD to revisit levels not seen since Q4 2020, one simple historical trend is now saying that the pair has already seen its latest macro lows.

Analyzing the 3-day chart, Wolf argued that the 100-day moving average (MA) crossing the 200MA will act as a price floor signal — just like in previous bear markets.

“Negative 3d MA100 will cross positive 3d MA200 by half July, that would confirm that bottom is in,” he wrote.

Specifically, the crossover of the two MAs is due on or by July 15 — in just a week’s time — after which future trajectory should be confirmed. Should Bitcoin avoid major downside in the meantime, $17,600 will thus remain as the latest long-term BTC price bottom.

Despite historical precedent, such an outcome is nonetheless far from certain. Prior to the July 15 deadline, crypto markets will have to weather an ongoing macro economic storm, which has so far proved deadly for risk assets across the board.

July 13 will be of particular interest to market participants, this date marking the release of Consumer Price Index (CPI) data from the United States for the month of June.

As Cointelegraph recently reported, inflation is already at 40-year highs, and CPI readouts have shown a consistent uptrend throughout 2022.

The faster inflation is shown to be accelerating, the more likely a reaction from the Federal Reserve, with monetary tightening having a direct negative impact on risk asset performance.

Moving averages stack up as resistance

BTC/USD meanwhile circled $20,500 at the time of writing on July 7, approaching wapproaching weekly highs.

Related: World’s first short Bitcoin ETF sees exposure explode 300% in days

In a thread of his own on July 6, analyst Keith Alan flagged various other daily, weekly and monthly MAs as zones of interest should Bitcoin manage to sustain upwards momentum.

“Continued rejections at the 21 DMA would indicate there isn’t enough bullish sentiment to push higher, which brings downside targets into focus,” he explained.

He noted, however, that should a resistance/support flip (R/S) occur, the 50-month MA would come into play, followed by the essential 200-week MA which has formed a key focus in prior bear markets.

As of July 7, the 21-day MA, 50-month MA and 200-week MA stood at $20,300, $21,570 and $22,560 respectively, data from Cointelegraph Markets Pro and TradingView showed.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

USD stablecoin premiums surge in Argentina following economy minister’s resignation

Argentina has been in a long-standing battle against rising inflation and a continued decline of the peso against the U.S. dollar.

Argentina, a country with one of the highest crypto adoption rates in the world, saw the price of United States dollar-pegged stablecoins surge across exchanges on Saturday after the abrupt resignation of its Economy Minister, Martin Guzman. 

The minister’s shock exit, confirmed on his Twitter account on Sunday via a seven-page letter, threatens to further destabilize a struggling economy battling high inflation and a depreciating national currency.

According to data from Criptoya, the cost of buying Tether (USDT) using Argentinian pesos (ARS) is currently 271.4 ARS through the Binance exchange, which is around a 12% premium from before the resignation announcement, and a 116.25% premium compared to the current fiat exchange rate of USD/ARS.

The local crypto price tracking website has also revealed a similar jump in other USD-pegged stablecoins, including Dai (DAI), Binance USD (BUSD), Pax Dollar (USDP) and Dollar on Chain (DOC).

Argentineans have been piling into crypto as a means to hedge against the country’s rising inflation and a continued fall of the Argentinean peso against the USD.

In 2016, before inflation really took its toll, one USD was only able to buy around 14.72 Argentinean pesos. However, six years later, one USD is able to buy as many as 125.5 ARS.

The extra premium on U.S.-dollar pegged stablecoins is the result of a law passed on September 1, 2019, called Decree No. 609/2019, and has made it virtually impossible for Argentinians to exchange more than $200 in greenbacks per month at the official exchange rate.

It was imposed as a means to prevent the Argentinean peso from free-falling amid a struggling economy. In May, the Argentinean annual inflation rate accelerated for the fourth straight month, hitting 60.7%, according to Trading Economics.

Related: Argentina carries out crypto wallet seizures linked to tax delinquents

The South American nation has the sixth-highest adoption rate globally, with around 21% of Argentineans estimated to have used or owned crypto by 2021, according to Statista.

In May, Cointelegraph reported that “crypto penetration” in Argentina had reached 12%, double that of Peru, Mexico, and other countries in the region, primarily driven by citizens seeking safe haven against rising inflation.

In addition to Bitcoin, Argentineans have been turning to stablecoins increasingly as a means of storing value in the United States dollar.

Bitcoin trader says expect more chop, downside, then sideways price action for BTC this summer

Crypto Jebb and independent market analyst Scott Melker agree that the crypto market’s toughest days still lay ahead.

Discussion of the state of the crypto market has been a dominant headline over the past few weeks as non-crypto native media excoriate Bitcoin (BTC) and DeFi investors for investing in assets with no fundamental value. At the same time, crypto-savvy analysts and traders have been pouring over charts, looking for clues that signal when the market will bottom and reverse course.

Novice investors are clearly nervous and a few have predicted the demise of the burgeoning asset class, but for those that have been around for multiple cycles, this new bear market is just another forest clearing fire that will eventually lead to a healthier ecosystem.

The next steps for the crypto market was a topic discussed in depth with Cointelegraph contributor Crypto Jebb and independent market analyst Scott Melker. The pair chatted about their views on why the value proposition for Bitcoin remains strong and what the price action for the top cryptocurrency could look like moving forward.

Here’s a look at some of the key points discussed by Crypto Jebb and Melker.

Bitcoin is being used as it was originally intended

Traders are primarily focused on Bitcoin’s spot price and lamenting the fact that it is not performing as the inflation hedge that many promised it would be, but Melker pointed out that its performance largely depends on the country and economic state of where an individual lives.

Bitcoin may be down significantly in terms of U.S. dollars, but when compared to countries like Venezuela that are experiencing hyperinflation, or Nigeria, which has a large unbanked population, BTC has offered people a way to preserve the value of their money and transact in an open financial system.

One of the biggest functions highlighted by Melker is that Bitcoin is the first real asset that has given people around the world the ability to opt out of the current financial system if it’s not working for them.

According to Crypto Jebb, Bitcoin is thermodynamically sound, meaning he defined as the asset holding on to the energy that is put into the system and that it doesn’t “leak” it out through things like inflation.

What direction will the market take?

Regarding the market’s future, Melker made sure to emphasize that while it may not seem like crypto adoption is moving fast to those who have been in the market for years, “the adoption of Bitcoin is faster than the internet. It’s a hockey stick curve that is absolutely going parabolic.”

Both Crypto Jebb and Melker suggested that the paradigm shift toward investing in cryptocurrencies just needs more time because people who have been conditioned to invest in things like a 401k or Roth IRA and most investors are trained to fear risk.

In response to possible critics who would cite Bitcoin’s volatility as a core reason to avoid cryptocurrencies, Melker highlighted the struggles that equities markets have had lately, citing the poor performance of stocks like Netflix, Facebook, PayPal and Cathie Woods’s ARK funds.

Melker said,

“Last month was the first time I believe I saw research from Messari that said there wasn’t a single place that you could have basically put money in an asset class and stored any sort of value. And if you stayed in cash, you lost 8% of your buying power doing that.”

Related: Deutsche Bank analysts see Bitcoin recovering to $28K by December

Expect more downside over the short-term

According to Melker, the current condition of the market is poor and in the short-term, it’s important to remember that “the trend is your friend” and that further downside is likely.

That being said, Melker indicated that there are some developments coming up that could help the market out of its lull, including the Fed tightening cycle which has historically put pressure on asset prices for the first three quarters of the tightening cycle until the market adjusts to the new reality.

Melker said,

“My best guess is that we have a very choppy, boring low-volume, low liquidity summer. Maybe we put in new lows, or maybe we just chop around from $17.5K to $22K or $23K, something like that. And then we really start to see what the market is made of coming into the end of the year.”

Don’t miss the full interview on our YouTube channel and don’t forget to subscribe!

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Ethereum $1K price support in danger as Q2 comes to a close

The latest ETH plunge has triggered a bearish continuation setup, with an interim downside target 20% below the current prices.

Ethereum’s native token Ether (ETH) fell on the final trading day of Q2/2022, trading in sync with riskier assets amid persistent fears of higher inflation and rising interest rates. And it could result in further declines heading into Q3.

ETH price breakdown underway

ETH’s price plunged nearly 5% this June 30 to $1,044 following a four-day losing streak. The ETH/USD pair has also broken below its interim rising trendline support, which in conjugation with a horizontal trendline resistance to the upside, constitutes an “ascending triangle” pattern.

Ascending triangles are bearish continuation patterns when they occur after a sharp downtrend. Therefore, a breakdown out of an ascending triangle typically results in the price falling further lower, typically by as much as the structure’s maximum height.

Ether had been trending inside an ascending triangle since June 13, breaking below the triangle’s lower trendline on June 29 — a move that accompanied a spike in trading volumes, confirming traders’ conviction about a further downtrend.

ETH/USD daily price chart featuring “ascending triangle” setup. Source: TradingView

As a result, ETH’s downside target in Q3, led by the ascending triangle setup, comes to be near $835, almost 20% lower than June 3’s price.

Exchange reserves are rising

The bearish technical outlook is also boosted by an uptrend in the number of ETH on exchanges.

Notably, investors have deposited around 1 million Ether tokens across all crypto trading platforms since May 2022, according to data from CryptoQuant. As the amount of ETH rises in exchanges’ wallets, it indicates a growing selling pressure in the Ether market.

Ethereum exchange reserves. Source: CryptoQuant

Institutional investors have also been limiting their exposure in Ether by withdrawing capital from the dedicated investment funds, CoinShares noted in its weekly report.

Ether-focused investment products have witnessed $136.9 million worth of outflows in June. In 2022 so far, they have processed circa $450 million in withdrawals, confirming that traditional investors are very bearish on ETH.

Net flow into/out of crypto funds by assets. Source: CoinShares

ETH sharks and whales buy the dip

On the bright side, the decline in Ether’s prices across June has provided some of its richest investors the opportunity to “buy the dip.”

Related: ‘Can’t stop, won’t stop’ — Bitcoin hodlers buy the dip at $20K BTC

“Ethereum shark and whale addresses (holding between 100 to 100K $ETH) have collectively added 1.1% more of the coin’s supply to their bags on this -39% dip [since June 7],” noted Santiment, a crypto-focused data analytics platform, adding:

“Historical evidence points to this tier group having alpha on future price movement.”

Ethereum ‘whale’ holdings. Source: Santiment
ETH number of addresses holding 100+ coins. Source: Glassnode.

Additionally, smaller investors have also been showing a similar dip-buying sentiment, with a consistent increase in addresses holding at least 0.1, 1, and 10 ETH since the end of last year, data from Coinglass shows.

Ether’s price is currently down nearly 75% year-to-date.

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