Today, Bitcoin slipped to levels below $22,000 after several days of consolidation. Also under selling pressure ahead of the weekend is Ethereum, which is trading below $1,750. The sell-off is particularly worrisome because the 'king of cryptocurrencies' has broken key supports in the form of 200-session moving averages for the second time in the last 3 months, which was not the case in previous bull markets:
- Both the 200SMA ($23,000) and 200WMA ($22,800) averages were broken, potentially indicating a return to a major downtrend. Now both averages have gone from support back to resistance. The cryptocurrency erases July's gains almost completely. Bitcoin is not helped by a strengthening dollar;
- Ethereum is losing despite the upcoming September 15 'the merge' i.e. Consensus Change on Proof of Stake. Developers have reported that while the merge will make Ethereum a 99.5% greener cryptocurrency it will not make network fees (gas fees) go down. Some investors predicting increased network capacity may not be happy with the announcement;
- The markets are waiting for information coming from the Jackson Hole conference, where Fed chief Jerome Powell will speak on August 26 about fighting inflation and reducing the Federal Reserve's balance sheet. The cyclical meeting organized by the Fed will be attended by central bank chiefs from different parts of the world, politicians, influential figures from the financial industry and academics. There is speculation that the regulation of cryptocurrencies and the possibilities of the emerging blockchain technology may also be addressed;
- Altcoins are also losing mightily, with Filecoin falling nearly 17%, Algorand losing 10%, and metaversion project Decentraland losing 12%. The declines are best endured by the two largest altcoins, Ethereum and BinanceCoin.
Bitcoin chart, W1 interval. Bitcoin's renewed break of its 200-session moving average is an anomaly and confirms the cryptocurrency's weakness. In previous downturns, the 200-session average was knocked down only twice with the bulls always recovering quickly, and the retest of the lows was moderately dramatic. If demand does not recover in the coming days, the situation may point to strong supply, which may want to retest the June lows. Source: xStation5
