After recording consistent gains at the beginning of August, Bitcoin and Ethereum experienced a precipitous decline heading into the weekend, following in the footsteps of other cryptocurrencies. This was due to investors reducing their exposure to risk assets against the backdrop of an uncertain macroeconomic environment.
After suffering a loss of more than 7% in the previous twenty-four hours, the price of bitcoin had fallen to approximately $21,459 by the middle of the trading day on Friday. The price of Ethereum fell during the same time period by nearly 6%, bringing it down to $1,697 on the market. The value of XRP, Solana, Cardano, and Dogecoin all decreased, with the corresponding losses coming in at just over 9%, 11%, 12.5%, and 13.5%. The world’s second-largest meme cryptocurrency, Shiba Inu, saw a pullback of nearly 12.40%, erasing the previous week’s gains of 41% and invalidating a bullish good setup.
According to data provided by CoinGlass, a total of around $552.71 million worth of cryptocurrency assets were liquidated, and 157,747 traders were caught in the crosshairs. As a direct result of this, the total value of all cryptocurrencies on the global market fell to $1.03 trillion following a decline of 8.10% over the course of the previous day.
The reduction in holdings this week comes on the heels of a dovish report from the FOMC that suggested the Fed may temper its strong stance on inflation. Even though it was anticipated that this data would strengthen the markets, investors are still afraid that a recession could be on the horizon because economic activity in the United States for the month of July dropped lower than it had in June.
The news that Canada’s cryptocurrency exchanges Newton and Bitbuy have imposed an annual 30,000 CAD purchase limit for Ontario-based cryptocurrency users on all crypto assets other than Bitcoin, Ethereum, Bitcoin Cash (BCH), and Litecoin (LTC) in the midst of stronger guidelines has also roiled major crypto-assets.
On the other hand, with the highly anticipated Merge event taking place in a little less than a month, Ethereum investors have increasingly become divided into the stakes that a Proof of Stake network has to offer in comparison to a Proof of Work one. This is because the Merge event is less than a month away. As a consequence of this, some holders of ETH have adopted a risk-off strategy by decreasing their exposure to Ether until the merge is completed and made live.
Having said that, the ongoing decline has caused market analysts to be confused, with some of them believing that Bitcoin’s price has not yet reached its lowest point. “Assuming the “bottom” is in, BTC might retest as low as $19,000,” said a Twitter user who goes by the pseudonym “Aeonouss.” “However, if the current “bottom” of $17,500 does not hold, then the range of approximately $16,000 to $12,000 presents the next area of support,” said “Aeonouss.”
According to the findings of Cauê Oliveira, a guest analyst working for CryptoQuant, if the current movement of BTC is a replication of the bear cycles that occurred in 2014 and 2018, we may discover the region of maximum pressure in early October. By that time, he anticipates that the price of BTC will be somewhere in the range of $10,000 to $14,500.