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August 29, 2022

Is Another Crypto Mass Sell-Off Coming?

The crypto market has seen huge drops over the last ten days, with both medium- and long-term expectations being significantly impacted. First, a market-wide selloff spearheaded by whales and miners drove the values of Bitcoin and Ethereum below $21,000 and $1,550.

Then, the hawkish attitude of Fed Chair Jerome Powell drove Bitcoin and Ethereum prices further down. In light of a potential 75 basis point rate rise in September and pessimistic futures, the cryptocurrency market is expected to see another downturn, according to available data.

The cryptocurrency market has become increasingly gloomy as Bitcoin and Ethereum continue to tumble below important psychological levels. Wall Street firms, such as Bank of America, Goldman Sachs, and UBS, anticipate rate rises of at least 100 basis points by the end of the year.

Experts on Wall Street anticipate a 50 to 75 basis point rate rise in September and a 25 to 25 basis point rate hike in November and December. In addition to reaffirming aggressive rate rises to combat inflation, Fed Chair Jerome Powell also confirms gradual rate hikes under favorable circumstances.

According to the CME’s FedWatch Tool, the chance of a 75 bps rate rise in September is 66.5%, while the probability of a 50 bps rate hike is just 33.5%.

The investors are now pessimistic because their expectations for the medium and long term are unfavorable. The BTC and ETH options and futures are negative since the September expiration might result in billions of dollars of liquidations.

Nevertheless, a significant rate increase in September would likely rely on the CPI data released on September 13, since the Fed anticipates a decrease in commodity prices.

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The crypto market may be seeing a number of unfavorable forces that are driving prices down. However, the lack of bitcoin activity over many years is a significant negative indicator.

Seven to ten years of dormant 5,000 BTC were traded in a single block. It may be crucial in terms of market timing as the cryptocurrency market continues to collapse. This year’s previous inactive bitcoin movements were followed by a decline. Thus, the cryptocurrency market may see additional losses in September, and prices may revisit their lows from July.