After enjoying a short-term rally that culminated in the general market regaining the $1 trillion market capitalisation, the crypto sector is experiencing a minor pullback resulting in capital outflows. Bitcoin (BTC) is among the assets leading the outflow with the flagship crypto facing a battle to maintain its price above $20,000.
In particular, the total crypto market capitalisation as of July 26 stood at $966 billion after recording outflows of $41 billion or a drop of 4% in the last 24 hours, according to CoinMarketCap data retrieved by Finbold.
Selling pressure back in the crypto market
The drop in market capitalisation indicates a selling pressure is back in the broader crypto sector with Bitcoin plunging to a weekly low of $21,000. Based on the recent price movement, there is a dent in Bitcoin’s sustained rally, a factor that has raised the possibility of the crypto sinking below $20,000.
However, the market has been experiencing extended days of rally powered by factors like the upcoming Ethereum Merge upgrade that will see the crypto shift from the Proof-of-Work (PoW) protocol to the Proof-of-Stake (PoS) mechanism.
Confidence has been building up in the market and it was expected that if the rally could hold, the investor sentiments could be positive driving buying pressure.
Over the past week, the market had shown some reliance after sustaining the market cap above $1 trillion despite factors like electric vehicle (EV) maker Tesla (NASDAQ: TSLA) resorting to selling $936 million worth of Bitcoin.
Notably, crypto market specialist Dennis Porter pointed out how well Bitcoin continues to perform in spite of a number of challenges and setbacks that have gone against the asset.
Crypto market set for a healthy pull back
In this line, pseudonymous crypto trading analyst Rekt Capital believe that Bitcoin and Ethereum are positioned for health pull back.
“After a strong week last week, the Crypto market looks set for a minor pullback. Bitcoin and Ethereum and many Altcoins appear to be positioned for healthy dips which could figure as key retests of previous resistances into new supports,” said Rekt Capital.
Notably, the correction correlates with the expected change in the global macroeconomic factors with the Fed intending to hike interest rates on a 75 basis point. However, with June inflation numbers hitting a record high, there is room the hike could be 100 basis points.
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