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24 Aug 2022

Bitcoin (BTC) Market Update 08/24

Between August 15 and August 19, the Bitcoin market witnessed a 16.5% correction as it attempted the $20,800 support. In actuality, a $4,050 price difference is quite modest, particularly when Bitcoin’s 72% yearly volatility is taken into consideration.

Currently, the S&P 500’s volatility is at 31%, which is much lower, yet between June 8 and June 13, the index traded down 9.1%. So, according to the historical risk measure, the index of significant U.S.-listed corporations had a more sudden change.

The attitude of crypto investors deteriorated at the start of this week after China’s central bank lowered its prime rate for five-year loans on August 21 in response to deteriorating circumstances in the Chinese real estate market. In addition, a strategist at Goldman Sachs investment bank claimed that inflationary pressure will push the U.S. Federal Reserve to tighten the economy more, which would have a negative effect on the S&P 500.

Regardless of the present 80/100 connection between equities and Bitcoin, investors often seek refuge in the U.S. dollar and inflation-protected bonds when they anticipate a crisis or market catastrophe. This phenomenon is known as a “flight to quality” and has the tendency to increase selling pressure on all risk markets, including cryptocurrency.

Bitcoin has been unable to break through the $20,800 support despite the bears’ best attempts. This trend explains why the expiration of monthly options on Bitcoin worth $1 billion on August 26 might favor bulls despite the recent 16.5% decline in five days.

Bitcoin bulls must drive the price over $22,000 on August 26 in order to prevent a probable loss of $140 million. However, Bitcoin bulls liquidated $210 million worth of leveraged long futures options on August 18, so they are less likely to drive the price higher in the near future.

Also Read:  Bitcoin Price Analysis 03/01

Consequently, the most likely scenario for August 26 is a price range between $22,000 and $24,000 which provides a balanced conclusion between bulls and bears.

If bears exhibit power and BTC falls below the crucial $20,800 support level, the $140 million loss in the monthly expiration would be the least of their worries. In addition, the move would invalidate the previous bottom of $20,800 on July 26, so halting a seven-week-long upward trend.

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