Analysis: Crypto Market May Trade Sideways as Leverage Clears and Buying Cools

Much of the excessive leverage that had built up in the cryptocurrency market has now been cleared, but buying interest remains too weak to drive a fresh rally, according to a market analysis.

Wintermute said in its latest market report, cited by Wu Blockchain on June 23, that most accumulated leveraged positions were liquidated during the recent market correction. As a result, the market structure has become healthier than before.

The firm said continued Bitcoin purchases by Strategy, the company led by Michael Saylor, have helped ease concerns over potential selling pressure.

Even so, Wintermute said key buyers such as exchange-traded funds and Strategy are no longer attracting inflows as strong as those seen in previous rallies.

Until structural fund flows improve, the market is more likely to remain range-bound than enter a new uptrend, Wintermute wrote. For now, trading within a band is the most realistic scenario rather than a resumption of the bull market.

Wintermute added that the market could see a short-term rebound if U.S. personal consumption expenditures, or PCE, inflation slows more than expected or if geopolitical tensions in the Middle East ease. But any such gain would be closer to a technical bounce than a signal that the market has found a bottom.