Crypto Crash: $320 Million Wiped Out As Bitcoin And Ethereum Nosedive
August 29 2024 - 4:20AM
NEWSBTC
After touching recent highs of $64,653 for Bitcoin and $2,815 for
Ethereum, in a sudden move backward, the cryptocurrency market had
sharply backpedaled on Thursday, with Bitcoin shedding more than 6%
and Ethereum dropping more than 7%. Related Reading: XRP Poised For
Over 5,000% ‘Explosive Charge’, Analyst Says This sudden fall has
left many analysts and investors wondering about the future course
of some of the top digital assets, hence underlining how volatile
the market is wrought by macroeconomic events and changing mood
among investors. 📊 Crypto’s latest retrace is coming after longs
were pouring in on exchanges like @dYdX at the highest rate since
Bitcoin’s All-Time High craze in March. Greed suddenly came pouring
in on August 25th, and liquidations happened swiftly. When funding
rates get extreme in either… pic.twitter.com/siXhAI46VQ — Santiment
(@santimentfeed) August 27, 2024 Meanwhile, based on figures
provided by Santiment, long positions have been transpiring at the
fastest rate since Bitcoin’s peak in March, which is indicative of
a spike in market optimism-or perhaps greed-around August 25th. The
wave of liquidations appeared to catch the cryptocurrency market by
surprise, which fully ended its optimistic sentiment and led into a
steep correction in typical fashion for the wild swings of crypto.
Santiment says such sudden market shifts are often driven by
excessive leverage, as when imbalanced funding rates herald an
impending correction by way of the market resetting. Economic
Factors At Play Likewise, speculations of US monetary policy are
one of the key drivers for this recent change in price. Federal
Reserve Chairman Jerome Powell hinted at a probable interest rate
cut this year in the last meeting, adding more fuel to speculation
of more liquidity in the market. Since there is a traditional
weakening of the US dollar when interest rates are low, it makes
cryptocurrencies more attractive to investors. According to Ryan
Lee, the chief analyst at Bitget Research, Bitcoin may range
between $54,000 and $72,000, while Ethereum may range between
$2,250 and $3,350 in September. But again, these are not without
their own set of disclaimers since the market is always open to
surprises which might change this trend. Trading Volume And Market
Activity Despite the declines, however, trading volume has jumped.
Whereas an upsurge in trading volume could indicate panic selling
by investors attempting to cut their losses, it might also be
interpreted as quite the opposite – that investors feel bullish and
are buying into what they perceive to be undervalued prices in
anticipation of a market recovery. For example, the trading volume
of Bitcoin exceeded $30.5 billion, a 30% rise. It also usually
means that some traders are closing their positions while others
are benefiting from the great discounted rates. The reaction of the
market to this development will finally determine the direction
both Bitcoin and Ethereum travel. Related Reading: FET: On-Chain
Development Fuels 44% Surge In Just A Week Ethereum’s Network
Activity Falls Ethereum issues go beyond price volatility. In the
past month, daily trading volumes have dropped 55%. This drop in
network activity raises concerns about the Ethereum ecosystem’s
health. Ethereum trading volume dropped from 134.71 billion dollars
in July to 91.46 billion in August. The platform’s monthly
transactions have decreased to their lowest level since May 2020,
indicating a lack of interest. Analysts say this may be cyclical.
At present, the environment is not suitable to attracting network
workers. Featured image from Flickr, chart from TradingView
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