FxPro, an investment company, has reported that the recent correction in the cryptocurrency market has helped to alleviate overheating and overbought conditions in the market.
As of April 24th, the total capitalization of the cryptocurrency market has decreased by almost 9% to $1.155 trillion, returning to consolidation levels seen in late March to early April.
The market value of leading cryptocurrencies such as Bitcoin and Ethereum have also fallen by 8.4% and 11.8% over the past week, respectively.
According to FxPro analysts, this decline in value is technical in nature and is a result of the end of active speculation that had caused the market to overheat.
Looking ahead, FxPro experts anticipate that the cryptocurrency market will continue to test the medium-term uptrend, which will be represented by a 50-day moving average fixed at $27,000.
However, traders with short-term positions are advised to be cautious, as the risk of a sharp decline in asset values has increased.
FxPro analysts believe that the recent correction will have a positive impact on risk analysis by potential investors, as it has eliminated the overly positive sentiment that had been pervasive in the market.
In a similar vein, CryptoQuant, a Korean company, has attributed the recent drop in Bitcoin’s market value to the overheating of the market.
Analysts at CryptoQuant identified two indicators of the futures market – open interest rates and funding rates – as key factors that contributed to the decline.
Overall, it appears that the recent correction in the cryptocurrency market has helped to restore balance and may lead to a more stable and sustainable market in the long run.