In a dramatic turnaround from the previous calm, Bitcoin prices dropped by more than $3,500, reaching $64,500. Altcoins followed suit, with liquid positions rising by nearly $230 million in a single day. Investors should be cautious and watch the market closely, especially given the volatility Bitcoin has seen in recent weeks. This could increase the likelihood of further market corrections as we head into August.
Altcoin Market and Sentiment
Cryptocurrency market sentiment has taken a major turn. The Fear and Greed Index has dropped from “Greed” at 74 to “Neutral” at 52, reflecting a shift from optimism to caution among investors. Altcoins have followed suit, recording a 3% decline in the total cryptocurrency market cap, which has now reached around $2.41 trillion. This decline was exacerbated by the liquidation of leveraged positions estimated at $200 million, reflecting investors’ growing risk aversion.
Impact of Economic Data on Bitcoin
Bitcoin has been under increasing pressure due to important economic data released on Wednesday, July 31. Federal Reserve Chairman Jerome Powell confirmed that inflation has been declining over the past year, but noted that it is still high. This statement has raised uncertainty in the market, especially after the Fed’s decision to keep interest rates at 5.50%. There is speculation about a possible rate cut in September if inflation continues to decline. This economic context has prompted investors to take a more cautious approach towards Bitcoin and other cryptocurrencies.
Forecast: Resistance and Potential Risks
With Bitcoin still facing strong resistance at the $70,000 level, it is imperative that investors and traders remain prepared. In addition, it is important to follow market sentiment indicators such as the Fear and Greed Index, and important economic data, especially from the Federal Reserve.
Bitcoin Reserves Drop Points to a Long-Term Investment Strategy
The start of the week was very positive for the major cryptocurrency, as it jumped due to bull buying to its highest level since early June, recording $70,000. However, it was unable to hold this level and suffered a sharp decline. Bitcoin quickly dropped below $64,500. However, the bears regained control in the last few hours, pushing the coin to its lowest level in two weeks. Although it later rebounded and is currently trading near $64,000, Bitcoin is still more than $6,000 away from its high on Monday, recording a 2.5% decline in the past 24 hours. CoinGlass data indicates that around 70,000 traders suffered losses in the past day due to the extreme volatility. Notably, the value of liquidated positions in ETH exceeded those in BTC, reaching $62 million versus $61.5 million, respectively. Overall, liquidated positions amounted to $227 million at the time of writing. Using safe haven strategies and effective risk management techniques will be essential to navigate this volatile market. Since the beginning of 2022, Bitcoin reserves on exchanges have been steadily declining, currently standing at around 2.8 million Bitcoin, a historic low. This accelerated decline over the past year raises questions about investor behavior, especially as cryptocurrency prices have been rising. These investors appear to prefer to hold their coins in cold wallets, suggesting a long-term strategy to benefit from a potential rise in Bitcoin’s value, rather than being exposed to market volatility.
As Bitcoin reserves on exchanges continue to decline, the market appears to be heading towards a new stage of maturity. Investors, increasingly cautious, are choosing to ensure their holdings, influenced by external factors and optimistic expectations for the future of crypto.
Bitcoin Buying Surges by Large Investors in July 2024
According to blockchain analytics firm Investing, July saw a significant increase in Bitcoin purchases by large holders, who own at least 0.1% of the circulating supply. The amount of Bitcoin purchased amounted to more than 84,000 Bitcoin, with a market cap of $5.4 billion. This is the largest monthly volume of Bitcoin purchased since October 2014.
These purchases occurred as the price fell below $55,000 in early July, with brief pauses during the subsequent recovery to $69,000. By the end of the month, Bitcoin was up a meager 3%, according to CoinDesk data. This strategic accumulation suggests a strong expectation that the long consolidation phase between $50,000 and $70,000 could end with a bullish breakout, reinforcing the uptrend.
Analysts expect Bitcoin to continue to rise. The expected September rate cut could boost optimism and boost liquidity in the market, which could push bitcoin and other cryptocurrencies higher, Jag Conner, head of derivatives at Bitfinex, said in an email. Investors are looking for higher returns outside of traditional assets, which could boost inflows into exchange-traded funds. In remarks on Wednesday, Federal Reserve Chairman Jerome Powell signaled the possibility of a rate cut as early as September if economic data supports the move. The central bank left its current rate in a range of 5.25% to 5.50% as expected. ING Bank added in a daily note to clients that officials are likely to begin easing monetary policy from “tight” to “less tight” starting in September, with additional cuts expected in November and December.
