Bitcoin experienced a significant downturn on Monday, sending shockwaves through the digital asset space and prompting analysts to reassess trading strategies.
Despite the downturn, there are signs that Bitcoin is stabilizing and potentially recovering. At the time of writing, Bitcoin is changing hands for $54,803.07 after having bounced back 10% compared to this time yesterday, according to CoinGecko. But analysts still advise caution.
According to research firm 10x Research, financial markets are like puzzles that need to be reassembled periodically, with new drivers of asset prices emerging. This is one of those times, the firm wrote.
When the markets saw sharp declines in April and June, they were mitigated by increased leverage. Such a reversal may not occur this time, wrote 10X Research CEO Markus Thielen.
“Risk management is crucial during such periods to protect trading capital. August and September are notorious for slow trading. Many institutional players are on vacation, and deploying large amounts of capital is the last thing on their minds,” he wrote. “Opportunities will likely arise once this period ends.”
After Monday’s Bitcoin sell off, analysts also highlight the importance of monitoring macroeconomic factors, particularly the rate gap changes between the Federal Reserve and the Bank of Japan (BoJ).
When it comes to the global market selloff battering Bitcoin’s price on Monday, a focus has emerged on whether traders that borrowed the Japanese yen are this rout’s culprit.
The yen’s value has strengthened 10% against the U.S. dollar within the past month, according to TradingView data. Meanwhile, the price of Bitcoin has fallen 20% in the past week, dipping below $50,000 on Monday for the first time since February.
A so-called carry trade is rapidly being unwound, Jake Ostrovskis, an OTC Trad...
The Federal Open Markets Committee (FOMC), which sets the target federal interest rate, won’t meet again until September 17. But investors will be watching closely for assurance that a rate cut is on the horizon.
As of Tuesday afternoon, investors appear certain that the FOMC will cut interest rates in September. They only disagree on how much of a cut markets will see. Roughly 75% of investors think the Fed will cut interest rates to 50 basis points to 4.75% to 5%. The rest think the Fed will recommend a 25 basis point cut to 5% to 5.25%, according to the CME FedWatch Tool.
The recent BoJ rate hike and subsequent recovery in the Nikkei 225 suggest that market risks may not be fully priced in yet.
5. The crypto market's behaviour remains logical and aligned with investor expectations. Although the term structure jumped to backwardation, the medium to long-term butterfly Index has returned to average levels. Investors remain concerned about the short-term performance of BTC… pic.twitter.com/LzINsFx8ZU
"The likelihood of carry trade unwind triggering a complete turnaround in the U.S. financial cycle is low," according to crypto exchange BloFin.
However, they caution that Bitcoin and more traditional equities prices could fall further if the Fed-BoJ interest rate gap narrows rapidly.
Despite the gloomy outlook, there are signs that the market may be primed for stabilization.
On-chain analysis firm IT Tech pointed out on CryptoQuant that the current estimated leverage ratio, 0.1758, “is the lowest since early 2020” and that open interest—or open derivatives contracts—has sunk to $14 billion “also the lowest since mid-2021.”
Is the Crypto Market Deleveraged Enough After Yesterday's Crash?
“The significant drops in OI & ELR indicate substantial deleveraging. Many leveraged positions have been liquidated or closed, reducing market risk and volatility” – By @IT_Tech_PL
"The market appears sufficiently deleveraged post-crash, potentially leading to more stability and setting the stage for a recovery, assuming other market conditions remain favorable," IT Tech added.
However, analysts caution against hasty actions in this volatile environment.
"While buying the dip can sometimes be a sound strategy,” 10X Research’s Thielen wrote, “it remains too risky now."
On Monday, investors poured millions of dollars into U.S. spot Ethereum exchange-traded funds, even as a volatile global market wobbled on widespread sell-offs and recession fears.
The Dow Jones Industrial Average tumbled by 2.6%, the S&P 500 by 3%, and the Nasdaq Composite by 3.43, marking the indices’ worst day since September 2022.
Those declines were driven primarily by disappointing U.S. jobs data and shrinking manufacturing activity, which heightened recession fears.
Japan's Nikkei 225 in...
Offering a longer-term perspective on the market, BRN analyst Valentin Fournier said Bitcoin will keep pushing higher until the end of the year with an acceleration in October—but August and September could be volatile.
He recommends a strategic approach to the current market conditions, advising investors to "progressively increase positions," and views the current dip as "an interesting buying opportunity."
The U.S.’ economic recession odds fell between roughly 15% and 25% across prediction markets on Wednesday, shortly after President Donald Trump announced a 90-day pause on tariffs.
Global trading platform Myriad Markets forecast a 46% chance of the U.S. entering a recession by the end of 2025. Polymarket and U.S.-based Kalshi put the odds at 48% and 55%, respectively. (Myriad Markets is a unit of Dastan, Decrypt’s parent company.)
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Noted tech investor Cathie Wood and her actively managed Ark Invest ETFs reported the addition of nearly 200,000 Coinbase shares—around $31 million worth as of Tuesday's close—over the course of the last three trading days as markets tanked due to President Trump’s trade war.
The Ark Innovation ETF (ARKK), Ark Next Generation Internet ETF (ARKW), and Ark Fintech Innovation ETF (ARKF) all posted purchases of the leading American crypto exchange’s stock, highlighted by total additions of 83,157 s...
A trio of the top crypto assets by market cap jumped nearly 10% in an hour after President Donald Trump elected to hit pause on his aggressive tariff plan for the next 90 days.
The Ripple-linked XRP, Solana (SOL), and Dogecoin (DOGE) all gained at least 7.5% with XRP leading the pack, jumping 10% on the day to $2.04. SOL and DOGE are now up 12.5% and 10.5% in the last 24 hours, respectively, trimming their weekly losses to less than 10% according to CoinGecko.
“I have authorized a 90-day PAUSE...
