The price of Bitcoin (BTC) continues to struggle against $20,000 and repeated falls below this level have some analysts predicting a deeper decline in the short term. Earlier in the week, independent market analyst Philip Swift tweeted that the Crypto “Fear & Greed Index” had changed to “Extreme Fear”. This indicates a softening of investor sentiment.
The market is not shining $BTC about $20k. Back in True Fear today.
Live chart: https://t.co/Jr5151zN7I pic.twitter.com/UnztrZP7FP
— Philip Swift (@PositiveCrypto) August 31, 2022
The BTC market does not like sticking to $20,000. Back to great fear today. Live Chart: https://t.co/Jr5151zN7I pic.twitter.com/UnztrZP7FP — Philip Swift (@PositiveCrypto) August 31, 2022.
On August 29, the analysis firm Delphi Digital indicated that the open interest in bitcoin had reached a new all-time high and said:
“The leverage ratio of open interest on BTC futures reached an all-time high, at more than 3% of BTC’s market capitalization, following the entire market collapse. »
According to Delphi Digital, “Higher values suggest that open interest is large, relative to market size. This means a higher risk of market pressure, liquidation tricks or delivery events. »
It is not clear what could catalyze such an event, but any continuation of the current bearish trend in equities, which saw the Dow and S&P 500 decline for a fourth day, to end August at a loss, could continue continue to weigh the price of the. bitcoin. CNBC data shows the Dow ended August down 4.1% while the S&P 500 and Nasdaq ended the month with losses of 4.2% and 4.6%.
Loretta Mester, Chair of the Cleveland Federal Reserve, also said she expects the benchmark interest rate to rise above 4%. She indicated that it was very likely that there would be any cuts during the whole of 2023. The 4% rate is well above the Fed’s target range of 2.25% to 2.5%.
Given that cryptocurrency markets have been successful since the Fed began raising rates on July 26, 2022, and that BTC and equity markets show a strong correlation, it would not be surprising to see a long decline in the price of bitcoin next. a few months.
Also Read: Possible Double Bottom in Bitcoin Price Could Spark BTC Rally Towards $30,000, Despite ‘Real Fears’
On the other hand, traders seem to remain optimistic about the next Consolidation. Ether (ETH) and ETH staking-linked tokens have held up relatively well since coming back from last week’s selloff. After falling to $1,422 on August 28, Ether has gained 11.3% and is trading just below $1,600. Lido (LDO), the largest ETH betting service, is up 12% on the day and 32% from last week’s drop to $1.55.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Cointelegraph.com. All investment and trading involves risk. You should do your own research before making a decision.