Crypto Pulls Back, but Greed Lingers

Market Overview

The crypto market capitalisation is 2% higher than a week ago, but at $2.86T it is 3.7% below last Wednesday’s peak. Cryptocurrencies are pulling back after a sharp rally, but so far this is not happening as sharply as in metals, let alone bonds. It is logical to expect a technical retest of the previous local highs in the $2.75T–$2.80T range. Only a sustained fall below this level should be viewed as a warning sign that a medium-term peak is forming. Although the trend over the past 24 hours has been predominantly downward, some coins continue to rise. The top gainers were The Graph (+18.1%), Immutable (+9.7%) and Hedera (+3.5%). The biggest fallers were Uniswap (−9.7%), Bitcoin Cash (−9.6%) and Dash (−6.9%).

The sentiment index stood at 74 on Monday, remaining on the verge of entering the ‘extreme greed’ zone. This is a commendable sign of resilience against the backdrop of a price pullback and stands in striking contrast to the ‘fear’ that has characterised the stock market for the past 20 days.

Bitcoin has pulled back to $83K, testing the lower boundary of last week’s consolidation range. As with the market as a whole, a retest of the $82K region, where peaks were formed in May and early September, is entirely to be expected under current conditions. Such a sell-off from the highs relieves localised overheating, allowing short-term buyers to lock in some profits. Looking ahead, a sustained return to prices below $80K would be an important signal that the market is not ready to move higher for some time yet. If, however, this consolidation is soon followed by a new bullish momentum, it could send the leading cryptocurrency well above $90K.