In a dramatic move, cryptocurrency markets have retreated sharply on Thursday. Bitcoin has lost more than six percent of its value and Ethereum more than seven percent.
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This sudden fall Many analysts and investors are now wondering what the future holds for some of the most popular digital assets. This highlights how the volatile market can be influenced by changing macroeconomic conditions and investor moods.
📊 After longs poured in to exchanges such as @dYdX The rate of Bitcoin transactions has increased since the Bitcoin craze began in March. The 25th of August was a day when greed surged and quick liquidations occurred. When funding rates get extreme in either… pic.twitter.com/siXhAI46VQ
— Santiment (@santimentfeed) August 27, 2024
Santiment figures show that long positions are increasing at the highest rate since Bitcoin’s March peak. This indicates a surge in optimism or greed around August 25th.
This wave of liquidity caught the crypto market off-guard, which led to an abrupt correction that was typical of the volatile swings in the crypto world. Santiment notes that such abrupt market changes are frequently driven by excessive leverage. This is especially true when the imbalanced funding rate signals an impending correction.
There are Economic Factors in Play
This recent price change is also largely due to speculation about the US monetary policies. Federal Reserve In the previous meeting, Chairman Jerome Powell hinted that a possible interest rate reduction this year was likely. This has fueled speculation about more liquidity on the market.
Investors are attracted to cryptocurrencies because of the traditional weakness in the US dollar during low-interest rates.
Ryan Lee, chief analyst of Bitget Research. Bitcoin The range of possible earnings is between $54,000 to $72,000. Ethereum The range of prices in September is between $2250 and $3350. These aren’t without their downsides. own The market can always surprise you, and this could change the trend.
Trading Volumes and Market Activity
Trading volume is up despite the decreases. 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.
You can, for example. trading volume Bitcoins have now exceeded $30,5 billion. This is a 30 percent increase. It can also mean that traders will close out their positions and others may benefit from these great rates. It is ultimately determined by how the market reacts to this new development. direction Both Bitcoin and Ethereum can travel.
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Ethereum Network Activity Drops
Ethereum problems go beyond volatility in price. Daily trading volume has dropped by 55% in the last month. It is concerning that the Ethereum Ecosystem’s health has declined due to this drop.
Ethereum’s trading volume fell from 134.71 Billion Dollars in July to just 91.46 Billion in August. Monthly transactions on the platform have dropped to their lowest levels since May 2020. This indicates a lack in interest.
Analysts believe this could be cyclical. The current environment does not encourage network workers.
Chart from TradingView, Featured Image from Flickr
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Source: www.newsbtc.com