The crypto market saw modestly higher prices on Monday, despite warnings from analysts and institutional investors that the market could fall further as contagion from recent insolvencies continues to spread.
As of Monday at 16:17 UTC, bitcoin (BTC) traded at USD 19,819, up 4% for the past 24 hours but down 7% for the past 7 days. Meanwhile, ethereum (ETH) stood at USD 1,115, up almost 6% for the day and down 9% for the week.
The uptick in crypto prices came while the crypto research and investment firm CoinShares reported an increase in capital flows to the new short bitcoin exchange-traded fund (ETF) known as BITI.
In total, short bitcoin funds saw inflows of USD 51.4m last week, indicating increasing bearishness towards the number one cryptoasset among investors who prefer these more traditional investment vehicles.
The short bitcoin inflows made up the vast majority of total crypto fund inflows for the week, with only USD 4.9m flowing into ETH-backed funds and USD 4.4m flowing into crypto multi-asset funds.
Compared to the week before, last week’s inflows mark an improvement from the record USD 423m outflows – even though most of last week’s inflows went into the new short bitcoin ETF.
'Convinced' of more downside
Commenting on the state of the crypto market on Sunday, the Singapore-based crypto trading firm QCP Capital said its “positive outlook is waning,” while adding that they are “convinced” that any near-term upside will be capped.
According to the firm, the main reason for this bearish outlook is earlier comments from US Federal Reserve (Fed) Governor John Williams about the need to “get real rates above zero,” and the fact that quantitative tightening (QT) started in the US on June 15 and is set to be ramped up further going forward.
In addition, the trading firm also said about the credit crisis among firms in the crypto space “is not over,” warning that “there might still be some liquidations on the horizon.”
Worth noting is that the comment pointed to by QCP Capital about real rates might mean something different in reality.
“Even if there is some tightening of financing conditions and nominal interest rates, real interest rates will go from very very deeply negative, to nothing or next to nothing,” Dutch central bank President Klaas Knot, said during a discussion at the World Economic Forum in May this year.
Bullish 4th of July
Meanwhile, the on-chain analysis firm Santiment said that today – the 4th of July holiday in the US – has so far been marked by “a massive uptick in longs on exchanges.”
Still, the analysts warned that overly eager bulls are often a contrarian signal, and said liquidations of leveraged long positions could follow.