The cryptocurrency market is experiencing significant declines today, with the prices of Bitcoin and all other cryptocurrencies retreating alongside stock market indices in response to concerns about a recession in the United States. Ethereum has experienced its largest single-day drop, nearly 25% in the morning hours, since May 2021. The total value of liquidated positions in cryptocurrency futures contracts has approached $1 billion. The Nasdaq 100 index has had its deepest 3-week streak since nearly 2022, and the correction in the stock market is exerting constant pressure on cryptocurrency prices.
- An additional factor of market disappointment is the re-emerging significant correlation between BTC and the traditional stock market during downturns, raising questions about whether Bitcoin can be used as an uncorrelated 'hedging asset' to limit portfolio volatility in critical moments. Most altcoins are losing between -15% and -30%.
- Bitcoin has fallen by 13% to $50,000, and Ethereum has lost nearly 17%, trading around $2,340. Although fears of a recession in the United States are increasing 'market pressure' on Fed policy, the central bank is almost certain to start a cycle of monetary policy easing. However, concerns arise about the circumstances under which cuts will occur.
- Last Friday, CNBC reported that Morgan Stanley would allow the recommendation of Bitcoin and Ethereum ETFs to nearly 15,000 investment advisors in the USA, which could potentially lead to significant reactions in both cryptocurrencies in the coming quarters.
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ETF Fund Outflows Net outflows from ETF funds amounted to nearly $300 million last Friday, and downward pressure is likely to be significant again today, given the deteriorating sentiment around risky assets in global markets. Source: Bloomberg Finance L.P , XTB Research
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Bitcoin's decline was halted at the 61.6 Fibonacci retracement level of the upward wave from January 2024. Currently, the cryptocurrency is down nearly 13%, and if the price falls below $48,000 again, in an extreme scenario, the next significant support level could be $35,000. An RSI below 20 points indicates a substantial level of oversold conditions. The price of the largest cryptocurrency has fallen by over $18,000 in just a few days; on July 28, BTC was testing around $69,000.
Source: xStation5
The price of the second-largest cryptocurrency, Ethereum, is down nearly 17% today; ETH is testing significant price reactions from the winter of 2023/2024. The RSI indicator shows 17 points. Source: xStation5
Seasonality indicates that historically, the months of August and September are not favourable for Bitcoin. It has performed best in the fall. Source: XTB Research, Macrobond, Bloomberg Finance L.P.
The post-halving sell-off rebound in 2024 was relatively small and unstable compared to previous cycles in 2016 and 2020. Today, the market is focusing on other factors, and the nominal supply effect of BTC is now concentrated around ETF fund activity. Source: XTB Research, Bloomberg Finance L.P.
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