As a seasoned analyst with over two decades of experience in financial markets, I’ve seen my fair share of market turmoil and volatility. The recent plunge in Bitcoin’s price has reminded me of the infamous Black Monday of 1987 – only this time, it was a Sunday carnage.
On Sunday, Bitcoin experienced a dramatic fall, as its value dropped to as low as $49,300. Given the potential signs of a US economic recession and rising tensions, the question remains: Can Bitcoin regain its footing amidst these challenging circumstances?
Sunday carnage
Over the past eight days, I’ve witnessed some intense Bitcoin market fluctuations. After breaching the peak of its bull flag on July 29, the price of BTC has experienced a significant correction of almost 30%. This drop from the highest point has resulted in a loss of approximately $21,000 for me as an investor.
On a fateful Sunday evening, I found myself caught in a whirlwind of market events that left me reeling. A cascade of liquidations swept across the crypto landscape, affecting traders on both the long and short sides. The final tally was staggering, with losses exceeding $1 billion. This turbulent episode serves as a stark reminder of the unpredictable nature of this dynamic market.
Over the past couple of hours, a drop in the value of the wick caused Bitcoin to reach its lowest point at around $49,300. However, there might be a recovery ongoing now, as the current price hovers slightly above $53,000.
Why the sudden plunge in price?
It’s reasonable to assume that the deteriorating U.S. economy could be a significant factor behind the crypto market’s downturn. The steep decrease in hiring and unexpectedly high unemployment rates certainly haven’t helped matters. Furthermore, the Sahm rule – a recognized indicator of recession – has recently been activated, suggesting that the U.S. may now be in a state of economic recession.
Arthur Hayes, former CEO of BitMEX, shared on X that his connections in conventional finance believe a significant player has suffered heavy losses and is offloading all cryptocurrencies. This could possibly be referring to Jump Crypto, a trading firm known for moving vast amounts of crypto assets over the weekend, including $46 million worth of Ethereum.
The Japanese stock market’s collapse, as evidenced by the 21% plunge in the NIKKEI over the weekend, appears to be the main issue at hand. This catastrophe has prompted the Federal Reserve to convene an emergency meeting on Monday. Given that US stock markets are set to open soon, a similar crash here seems likely. In light of this, it’s possible that the Fed might decide to lower interest rates immediately in response.
What’s next for the $BTC price?
By examining the daily Bitcoin ($BTC) chart, it’s apparent that a drop in price occurred and reached the region of horizontal support spanning from approximately $52,000 to $51,000. The significance of $52,000 lies in its alignment with the bottom of a bullish flag pattern, which suggests it could potentially act as a supportive level at least temporarily.
48,000 and 45,000 function as horizontal levels of support in the near future for the US stock market. As the market prepares to open, it remains uncertain how events will unfold. It’s advisable to ensure your safety belts are firmly fastened.
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2024-08-05 13:10