After posting systematic gains at August’s start, Bitcoin and Ethereum fell sharply towards the weekend, tagging along with other cryptocurrencies as investors reduced their exposure to risk assets against the backdrop of a blurred macroeconomic environment.
By Friday mid-day, BTC was trading at roughly $21,459 on major exchanges after plunging by over 7% in the past 24 hours. Ethereum also took a hit, dropping by approximately 6% in the same period to trade at $1,697. XRP, Solana, Cardano, and Dogecoin also tumbled, giving back just over 9%, 11%, 12.5%, and 13.5%, respectively. Shiba Inu, the world’s second-largest meme cryptocurrency, recoiled by over 12.40%, annihilating last week’s (41%) gains and invalidating a bullish solid setup.
Roughly $552.71 million worth of crypto assets were liquidated, with 157,747 traders being caught in the crosshairs, according to data from CoinGlass. Consequently, the global crypto market cap dropped to $1.03T after an 8.10% decrease over the last day.
This week’s drawdown comes on the heels of a dovish FOMC report that suggested the Fed may ease its aggressive stance on inflation. Although this report was expected to bolster markets, investors are still concerned that a recession could be in the offing, with the U.S. economic activity for July dropping lower than June’s.
News of Canada’s crypto exchanges Newton and Bitbuy imposing an annual 30,000 CAD purchase limit for Ontario-based crypto users on all crypto assets apart from Bitcoin, Ethereum Bitcoin Cash (BCH) and Litecoin (LTC) amid stricter regulations has also roiled major crypto-assets.
On the other hand, with the highly anticipated Merge event less than a month away, Ethereum investors have increasingly become divided into the stakes that a Proof of Stake network has to offer compared to a Proof of Work one. As a result, some ETH holders have taken a risk-off approach by reducing their exposure to Ether until the merge goes live.
That said, the ongoing downturn has thrown market analysts into a loop, with some convinced that BTC’s bottom is not yet in. “Assuming the “bottom” is in, BTC could retest as low as $19k, but if the current “bottom” of $17.5k does not hold, then the range of ~$16k to $12k presents the next area of support,” said pseudonymous Twitter user “Aeonouss”.
According to CryptoQuant’s guest analyst Cauê Oliveira, if the current BTC movement replicates the 2014 and 2018 bear cycles, we may find the region of maximum pressure in early October. By then, he expects BTC to be trading within the $10K–$14.5K range.