Author: Felix, PANews
Last night, several days of calm price movements suddenly ended, with prices of cryptocurrencies such as Bitcoin and Ethereum suddenly falling, with Bitcoin falling to its lowest level since the market panic in early August, approaching $56,000. The decline triggered a new wave of crypto position liquidations (mainly long positions), and the market generally turned red.
According to Coinglass data, the liquidation amount in the past 24 hours (statistical time is 11:30 on August 16) reached 222 million US dollars, of which 175 million US dollars of long positions were liquidated and 161 million US dollars occurred in the past 12 hours. Bitcoin is the token with the highest liquidation amount, with a liquidation amount of more than 79 million US dollars in the past day, followed by Ethereum, with a liquidation amount of about 70 million US dollars.
The market has recovered, with Bitcoin trading at $58,000, Ethereum trading at $2,580, and SOL trading at $140.
The decline may be due to the decline in leveraged long BTC futures and the decline in stablecoin demand
For now, there seems to be no obvious reason for the rapid decline. After the latest Consumer Price Index (CPI) report was released on Wednesday evening, U.S. stocks soared, while Bitcoin and Ethereum prices fluctuated greatly, indicating that the decline does not seem to be related to macroeconomic factors. Some people believe that the decline in demand for leveraged long BTC futures and stablecoins has led to the decline in Bitcoin prices.
Bitcoin has been stuck in a tight range since August 8, unable to break above $62,000 while consolidating support at $58,000. This consolidation reflects the growing uncertainty among traders, especially as BTC futures funding rates remain negative, indicating demand from buyers with low leverage.
Additionally, USDT traded 0.2% lower in China on August 15, hitting the lowest level in three months for the metric, indicating a reduction in demand for cryptocurrencies. This was a significant change from August 6, when traders paid a 2% premium for USDT.
According to BTC derivatives indicators and China’s stablecoin demand, Bitcoin will have a difficult time retaking the $62,000 support level. However, historical data shows that retail traders usually react to market movements rather than predict them, so the possibility of a breakout cannot be completely ruled out.
Analysts Bearish on Ethereum
Coincidentally, before the market plunge, some analysts were bearish on Ethereum and even believed that it might hit a new low near $1,600.
“I do not expect ETH to break out of $2,800-2,900 and instead expect it to remain range-bound for parts of August and September,” Arete Capital partner McKenna wrote in an Aug. 15 X post .
Meanwhile, analyst Peter Brandt said that ETH's price action presents two scenarios based on two chart patterns: a 5-month rectangle and an ascending wedge. In the first scenario, ETH rises above $2,960. In the second scenario, the collapse of the ascending wedge continues the downward trend and ETH falls to $1,650, which is the bearish target of the rectangle.
Bitcoin sees a ‘ bearish crossover ’
"A bearish crossover on the Bitcoin daily chart, with the 50-day moving average falling below the 200-day moving average, signals short-term weakness in the market," Mags, an anonymous cryptocurrency trader, wrote in a post on X. This is the second bearish crossover since the $15,500 bottom. The last bearish crossover was in September 2023, when the price was around $25,000. Since then, the price has been moving sideways for a few weeks before reclaiming the MA, leading to a bullish crossover and a strong upside rally.
IG market analyst Tony Sycamore added: “Bitcoin needs to reclaim the 200-day moving average to stabilize and initiate a test of trend channel resistance around $70,000.”
However, trader Mags said a death cross could actually be a good sign. When this has happened in the past, Bitcoin’s price rose by about 50% both times four months later.
In September 2023, Bitcoin’s 50-day moving average fell below its 200-day moving average when it was trading at $26,578. Just four months later, its price had risen 49% to $39,518.
In July 2021, the 50-day moving average was $34,671, while the 200-day moving average was $44,680. Similarly, just four months after the crossover, the price of Bitcoin rose 54% to $54,813.
Despite the market downturn, positive factors continue to
At this point, bulls are understandably frustrated with the recent trend as positive catalysts continue to emerge but prices fail to respond.
The first positive catalyst is the rebound in US stocks. The stock market rebound can be attributed in part to the now almost certain Fed easing cycle. For more than two weeks, the short-term interest rate market has priced in a 100% probability that the first Fed rate cut will come in September. Although monetary easing policies in the past have proven to be beneficial to cryptocurrencies, prices have not responded so far in this cycle.
In addition, the U.S. inflation rate fell to 2.9% in July, setting a record low for annual inflation since 2021. At the same time, Preston Caldwell, chief U.S. economist at Morningstar, said in a statement on Thursday that many analysts predict that the Federal Reserve will launch "aggressive" interest rate cuts starting in September to stimulate the U.S. economy.
US markets have also been strong recently, with the Nasdaq Composite up 2.34% in the past 24 hours, while the S&P 500 and Dow Jones Industrial Average are up about 1.61% and 1.39%, respectively. Both the Nasdaq and S&P 500 are now back to where they were before the panic in early August.
Another seemingly positive catalyst is the accelerated adoption of Bitcoin by institutions. Nate Geraci, president of ETF Store, said the latest batch of 13F filings (as of June 30) showed 1,924 institutional holders of spot Bitcoin ETFs. Geraci noted that despite the decline in Bitcoin prices between April and June, this number was still higher than the 1,479 in the first quarter.
On the other hand, the number of listed companies willing to use the capital market to increase their Bitcoin holdings is also increasing. Marathon Digital (MARA, which is already engaged in Bitcoin mining) raised $300 million in convertible bonds this week and immediately used the funds to purchase more than 4,000 Bitcoins at a price of about $59,000 per coin. Medical device manufacturer Semler Scientific (SMLR, which announced its Bitcoin funding plan a few months ago) received approval from the U.S. SEC this week to continue with a financing of more than $150 million, and the proceeds will be used to purchase more Bitcoin.
