Image Credits: CryptoAvanza
Bitcoin is currently hovering at its lowest point in about two months, and this is happening because a lot of people are selling off their cryptocurrencies, especially in the more complex financial contracts tied to these assets. This is causing a lot of attention to be on these types of trades, while direct sales of the actual cryptocurrencies are not making as big of an impact.
On August 18th, when the stock market in the United States opened, the price of Bitcoin was still quite close to its lowest value in two months. This drop was caused by a sudden and significant decrease in its price by about 8% in just one day.
In the world of cryptocurrencies, there’s a lot of trading happening, especially in these more complex financial agreements connected to them. During this time, it’s these types of trades that are getting the most attention, even though direct selling of the actual cryptocurrencies isn’t having as much of an impact.
There was a major event where a large amount of these complex trades were “liquidated,” meaning that people lost a lot of money. This happened on the Deribit exchange and was highlighted by a trading firm called QCP Capital. This suggested that a big account lost everything due to these trades.
Some people who watch the markets, including QCP Capital, noticed that the reaction to the news that SpaceX, a company, had reduced the value of its Bitcoin holdings by $373 million, was blown out of proportion. This company is led by Elon Musk, who has caused big changes in the cryptocurrency market before. People were hoping that this wouldn’t lead to too much instability this time.
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The scale of these “liquidations” was comparable to what happened after a big problem with the FTX exchange back in November 2022. This caused the value of Bitcoin against the US dollar to drop significantly, to around $15,600.
Bitcoin’s price was moving around $26,000 during this time, and people in the market had different ideas about what was happening and what it could mean for the future.
A well-known trader and analyst named Rekt Capital had a negative view, suggesting that there might be a pattern forming that could lead to further drops in Bitcoin’s value in 2023. This was compounded by the fact that the usual indicators that traders rely on, like trend lines and moving averages, were not providing much support during this downward trend.
On the other hand, some people in the market remained optimistic. A trader known as CryptoCon pointed out two important points that often come before the value of Bitcoin goes up again after a drop during a strong market period. These are related to certain levels in a mathematical sequence that often plays a role in financial markets.
Rekt Capital also mentioned that a common indicator used to measure the strength of a price trend called the RSI, was showing that Bitcoin was being sold a lot and was in a very weak state. This hadn’t been seen since June 2022, which was during a time when the market was doing poorly.
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People were also looking ahead to a speech by Jerome Powell, who’s in charge of the US Federal Reserve. His speech at an event called Jackson Hole was expected to bring more uncertainty to the market.
To sum up, on August 18th, the price of Bitcoin was struggling and near its lowest point in two months. This was happening because a lot of people were selling their cryptocurrencies through complex trades, even though direct selling wasn’t as impactful. There were differing opinions among traders about what was happening, with some worried about negative patterns and others finding signs that things could get better. Everyone was also waiting to hear what Jerome Powell’s speech might do to the market.
