Crypto news: Bitcoin drops below 21 000 USD level 📉

Sentiment around cryptocurrencies deteriorated immediately after markets lost confidence in the 'pivot' on the Fed. Cryptocurrencies are once again confirming correlations with U.S. indices, which have also suffered a drop in risk sentiment:

• Cryptocurrencies, which are a kind of barometer of risk sentiment among institutional and retail investors, are continuing the declines initiated last week and are unlikely to rebound ahead of the key event of the week - the Jackson Hole conference;
•  Friday's position liquidations cost leveraged options and futures traders more than $500 million.  201 USD million cost the liquidations of Bitcoin against Ethereum's 132 million USD, where markets played out the 'rally under the event' scenario of the blockchain's transition to the green 'Proof of Stake' model and the 'difficulty bomb' that is expected to make Ether a deflationary asset. The developers have not moved the date, it is still September 15. Ethereum developers have identified two potential problems in the network that could arise after the 'merger' was carried out, Tim Beiko reported on the possibility of creating 'fake blocks.'

•  The CEO of digital asset company Bakkt, which is backed by financial giant Intercontinental Exchange (ICE.US), indicated that 2023 could prove to be a much more favorable year for cryptocurrencies, and stressed the interest in the market coming from a number of institutions. Bakkt has signed agreements with Mastercard and Visa. One of the lead analysts at Bloomberg Intelligence, Mike McGlone according to Finbold, indicated that sentiment around cryptocurrencies will improve earlier in the later part of 2022;
• The risk that bankers will continue their restrictive pulling of money from the market and raise interest rates is high. The Federal Reserve has hinted that it will be determined to bring inflation levels to its inflation target, at 2%. While positive signals about a possible 'inflation peak' in the U.S. represent the first success of the tightening cycle, it is probably far too early for the Fed to be willing to 'hang up the gloves.' Bankers don't want a reworking of the 1970s scenario when too early monetary easing pushed the US into a painful recession that the US can't afford in the face of escalating geopolitical tensions.
• Fed chief Jerome Powell will speak at Friday's bankers' conference in Jackson Hole. Until then, uncertainty and weakened sentiment around risky assets may persist in the markets, which could result in further declines in cryptocurrency valuations. There has been speculation in the market about possible speeches on future regulation of the industry, at Jackson Hole. U.S. Treasury Secretary Janet Yellen, following the collapse of stablecoin Terra and the entire Luna blockchain and Tether 'depeg' in the first half of the year, pointed to the fall of 2022 as the period in which to expect the first transparent regulations on digital assets. A step toward regulation favorable to the cryptocurrency industry was recently taken by Australia. 

The Fear and Greed Index shows persistent fear. However, the index is still far from 'extreme fear' although recent liquidations in the cryptocurrency market are creating concerns around a retest of levels below $20,000. This means that cryptocurrency investors are in retreat and accepting Bitcoin's 'lower and lower' levels, and the lack of an 'Extreme Fear' breakout in the face of a drop below the key 200-session averages indicates room for further southward movement. Source: alternative.me

The liquidation of Bitcoin futures has pierced the levels of June this year and approached the maxima reached during the dynamic decline in May 2021 when Bitcoin payments stopped being handled by Tesla and China entered the fray against cryptocurrencies. Source: Glassnode

Bitcoin, H4 interval. The major cryptocurrency has dived below its 200-session moving average, which runs at $23,000. Fibonacci levels point to two more potential supports lying between $20,500 and $19,700. Breaking them would likely result in a 'bullish set-up' at the levels of the June minima at $17,300. Source: xStation5