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Bitcoin (BTC) investors are hopeful for a new all-time high, but the actual demand for BTC is rapidly declining. One group of investors, however, might still prevent a significant price drop.

Declining Demand for Bitcoin

Since the start of August, Bitcoin’s price has struggled to break above $60,000. This ongoing stagnation is delaying the recovery from the losses many investors suffered in the July crash. The cryptocurrency’s price movement is currently forming a broadening ascending wedge, but breaking out of this pattern is taking longer than expected. The primary reason for this delay is the drop in demand for BTC among investors.

According to an exclusive report from CryptoQuant, shared with BeInCrypto, large Bitcoin holders, often referred to as “whales,” have significantly reduced their holdings. The report highlights that the 30-day percentage change in whale holdings has plummeted from 6% in February to just 1% now. This reduction in holdings suggests that big players in the market are losing interest, which could further suppress Bitcoin’s price.

Bitcoin’s Path to Recovery

However, if Bitcoin manages to surpass $65,000, it could trigger a breakout above $71,500. This would potentially push BTC past its all-time high of $73,800, invalidating the current bearish-neutral outlook and sparking a new rally.

US stocks have been making a strong recovery after last week’s sharp decline, triggered by the Japanese carry trade unwind. While the market isn’t out of the woods yet, a positive Consumer Price Index (CPI) report expected later today could continue to fuel the rally. If that happens, Bitcoin (BTC) may well follow suit.

Recovery Follows the Bloodbath

Just over a week ago, the US stock market opened to a bloodbath on Monday, following the sudden unwinding of the Japanese yen carry trade. This event sparked fears that the long-anticipated recession might finally be taking hold.

The S&P 500 dropped around 8%, while the tech-heavy Nasdaq plunged more than 10%. Leading stocks, known as “The Magnificent 7,” suffered significant losses, with Nvidia (NVDA) falling 24% and other large-cap stocks losing at least 10%.

However, by the end of that Monday, recovery signs emerged, and the market has generally been on an upward trajectory since. If today’s CPI data is favorable, stocks could return to their pre-Japan crash levels by the end of the week.

Nasdaq About to Break the Downtrend?

Looking at the Nasdaq 100 Index, there’s a chance it could break the current downtrend today, depending on the CPI data. If the index can push through the resistance at $19,535, it would form a crucial higher high. This move could set the stage for the Nasdaq to head back to its all-time highs, potentially bringing the crypto market along with it.

Bitcoin’s Late Summer Breakout?

Bitcoin’s daily chart shows a similar v-shaped recovery, much like Nvidia. Currently, BTC is up 24% from its recent low. However, it still faces significant resistance at $61,000, followed by the 0.618 Fibonacci level at $62,000. The next targets would be $63,000 and $65,000 at the 0.786 Fibonacci level.

If the annual core inflation rate drops to 3.2%, the chances of the Federal Reserve cutting interest rates by 50 basis points in September will improve. While the economic outlook remains uncertain, and a black swan event is still possible, increasing global liquidity is creating a more favorable environment for Bitcoin. A late summer breakout could be on the horizon.

The crypto market faced a sharp downturn over the weekend, led by a slide in Bitcoin (BTC) that triggered widespread selling across major cryptocurrencies. With markets lacking a clear direction, traders are closely watching traditional finance markets for cues on positioning.

Bitcoin and Ethereum ETFs Experience Outflows

Bitcoin dropped 4.8% in the past 24 hours, trading just above $58,500 as of Monday morning in Asia. Ether (ETH) also suffered, losing 3.5%. U.S.-listed exchange-traded funds (ETFs) tracking these assets reflected the broader market’s uncertainty, with BTC ETFs seeing $89 million in outflows, while ETH ETFs recorded $15.7 million in outflows.

Major Cryptos Follow Suit

The selloff extended beyond Bitcoin and Ethereum. Solana’s SOL and Toncoin (TON) led the losses among major cryptocurrencies, each sliding 7%. Binance’s BNB dropped 3%, Dogecoin (DOGE) fell by 6%, and both Cardano’s ADA and XRP declined by 5%.

Additionally, tokens from blockchains Aptos (APT), Arbitrum (ARB), and The Sandbox’s SAND saw drops of up to 7%. These declines were influenced by upcoming token unlocks that are expected to release over $120 million worth of these tokens into the market, creating potential selling pressure.

⏰ Upcoming Token Unlocks (August 12 – 18)

Several crypto projects will unlock tokens this week, including $SAND, $CYBER , $RENDER , $STRK , $ARB , $APE , $ENA , $ROSE .

Investors, keep an eye on these token unlocks events! pic.twitter.com/4mifbnnsbx

— SoSoValue Research (@SoSoValue) August 12, 2024

Traditional Market Events to Watch

This week, key traditional market events could influence crypto prices. Both the U.K. and the U.S. will release July’s Consumer Price Index (CPI) readings on Wednesday. Australia’s consumer confidence and Japan’s Producer Price Index (PPI) are set for release on Tuesday. Later in the week, major companies like Alibaba Group and Walmart will report earnings, while Hong Kong and Taiwan will publish updated GDP figures on Friday.

These traditional market releases often impact crypto prices, as they provide insights into spending behavior and the broader economy. Positive economic data tends to boost investor confidence in riskier assets like cryptocurrencies, while disappointing data could drive investors toward safer options, potentially leading to further declines in crypto markets.

Bitcoin (BTC) is bouncing back after last weekend’s sell-off. The price is climbing, currently battling resistance around $57,000. Can BTC break through to the next target at $61,000?

The bulls have regained control. After hedge funds sold Bitcoin to exit their yen carry trade positions, BTC has surged by 16.5% from its $49,000 low. This suggests a potential V-shaped recovery. Now, BTC is trading just over $57,000, facing tough resistance.

Short-Term Resistance and Potential Rejection

In the short term, BTC faces horizontal resistance and a downward-sloping trend line from the previous $70,000 peak. The stochastic RSI indicates it might top out soon. This could lead to a price rejection and a dip possibly back to $52,000.

Bullish Weekly Candle Close?

On the weekly chart, Bitcoin’s recovery is more apparent. Long wicks on the candles show strong buying whenever prices drop. The current wick is the longest, hinting at robust support.

However, we must wait for the weekly close to confirm this. If BTC closes around this level, forming a hammer or dragonfly doji candle, it could signal bullish future action. The stochastic RSI, which recently crossed down due to heavy selling, is another factor to watch. If it crosses back up, it could support a bullish trend.

After a dramatic plunge on Monday, Bitcoin (BTC) fell to $49,300. By Tuesday, it had bounced back to $56,000. The big question now is: will this recovery continue, or is it the start of a bear market?

Crypto Trading’s 24/7 Nature: A Double-Edged Sword

Bitcoin and cryptocurrencies trade 24/7, a significant advantage over traditional markets. However, this non-stop trading also exposed a vulnerability over the weekend.

The Impact of Japan’s Interest Rate Hike

Japan’s central bank recently raised its interest rate by 25 basis points. This was only the second rate hike since 2007. This increase affected the “Yen carry trade,” where hedge funds borrow at low Japanese rates to invest in higher-yielding U.S. assets. The rate hike made this strategy less profitable, causing hedge funds to unwind their positions.

Weekend Sell-off in Cryptocurrencies

With traditional financial markets closed over the weekend, hedge funds needed liquidity to close their carry trades. Cryptocurrencies became the only sellable assets, leading to Bitcoin’s crash.

USD/JPY Holds Support Amid Market Turbulence

The USD/JPY pair saw a significant drop, favoring the yen and weakening the dollar. However, it found support around 145 JPY. While the carry trade unwinds, major stock markets are now open, and Monday saw a massive $6 trillion sell-off in traditional assets.

Federal Reserve’s Possible Response

There were rumors of an emergency meeting by the Federal Reserve to raise rates immediately. However, this move seems unlikely, as it could be seen as a sign of desperation.

Bitcoin’s Strong Bounce

Bitcoin showed a significant recovery from its low of $49,300. Strong support exists between $51,000 and $52,000, stemming from previous bull markets. If BTC ends the week above $55,600, the recovery might continue. Conversely, if it falls below $51,000, the next strong support is between $41,000 and $43,000, with the bull market trend line being the last defense.

Conclusion

Bitcoin’s recovery to $56,000 offers hope, but the market remains volatile. Investors should watch key support levels to gauge the future direction.

Bitcoin (BTC) faced a challenging August, plummeting over 13% to around $50,000 within the first five days. Despite this significant drop, key indicators hint at a possible rebound.

Long-term Options Skew Remains Bullish

One encouraging sign comes from bitcoin options on Deribit. The 180-day call-put skew remains above 3, indicating a long-term bullish outlook.

• Call Options: These allow the holder to buy bitcoin at a specific price later, representing a bullish bet.
• Put Options: These allow the holder to sell bitcoin at a specific price, representing a bearish bet.
• Options Skew: This measures the demand for call vs. put options. A positive skew indicates stronger demand for calls, suggesting optimism about future prices.

Despite the recent drop, the positive long-term pricing reflects confidence that bitcoin will recover once market volatility subsides.

Expert Insights

Analysts from LondonCryptoClub believe the U.S. economic slowdown will force the Federal Reserve to cut rates more aggressively, which is bullish for bitcoin. They also highlight China’s stimulus efforts and a weaker dollar as factors that will enhance global liquidity, benefiting bitcoin.

Cumulative Volume Delta (CVD) Suggests Dip-Buying on U.S. Exchanges

The recent sell-off saw significant dip-buying activity on U.S. exchanges like Coinbase, Gemini, and Kraken, as shown by the cumulative volume delta (CVD).

• CVD Explained: CVD measures the difference between the volume of buy and sell trades over time. A rising positive CVD indicates more buying than selling.
• Recent Trends: Since August 1, CVD on major U.S. exchanges has remained positive, suggesting net buying pressure and bargain hunting during price drops.

Kaiko’s analysis noted that while offshore exchanges like Binance and OKX experienced strong selling, U.S. platforms saw continued buying, indicating investor confidence in a rebound.

Conclusion

While Bitcoin’s August drop was steep, key indicators like long-term options skew and CVD on U.S. exchanges suggest potential for recovery. Investors are advised to stay informed and consider the long-term outlook.

Ether experienced its steepest drop since May 2021. Bitcoin also extended its decline, reflecting global market uncertainty.

Bitcoin’s Recent Decline

Bitcoin Falls Below $50,000

During Asian trading hours on Monday, Bitcoin (BTC) fell below $50,000 before rebounding to nearly $53,000. This marks its lowest level since mid-February. Rising tensions in the Middle East and global economic concerns have shaken investor confidence.

Fourth Consecutive Day of Decline

Bitcoin dropped for the fourth consecutive day, reaching a low of $49,112 according to TradingView data.

Ether’s Significant Drop

Ether’s 25% Slide

Ether (ETH), the native token of the Ethereum blockchain, plummeted to $2,060, its lowest since January 3. This near 25% drop is the worst single-day hit for Ether since May 2021.

Rumors of Liquidation

The sell-off was fueled by rumors that crypto market maker Jump Trading was liquidating assets. On-chain sleuth spotonchain identified a wallet linked to Jump Trading that transferred 17,576 ETH (worth over $46 million) to centralized exchanges, suggesting possible liquidation.

Impact on the Crypto Market

Massive Liquidations

This downturn led to over $1 billion in liquidations in the crypto futures market. Ether alone saw over $350 million in liquidated bets, an unusual occurrence.

JUST IN: $1,000,000,000 liquidated from the cryptocurrency market in the past 24 hours.

— Watcher.Guru (@WatcherGuru) August 5, 2024

Global Market Influence

The panic selling in the crypto market was triggered by broader financial market declines. Fears of a global recession and rising Middle East tensions spurred this sell-off. Japan’s Nikkei 225 Index fell 12.4%, the Stoxx Europe 600 Index dropped 2.8%, and S&P 500 micro futures lost 2.9%.

Market Sentiment

Crypto Fear and Greed Index

The crypto fear and greed sentiment index is now flashing “fear,” reaching its lowest level since early July. This index tracks volatility, prices, and social media data to gauge market sentiment, indicating whether participants are fearful (usually signaling local bottoms) or greedy (marking market tops).

Conclusion

The recent declines in Bitcoin and Ethereum highlight the volatility and interconnectedness of global financial markets. Investors should stay informed and cautious during these turbulent times.