Analyzing the BTC and Stocks Crash
In this analysis, we will cover:
1. When to Buy?
2. Causes of the Dump
3. Crypto and Stocks Liquidations
4. Japan's Economy
5. VIX
1. Where to Buy?
Bitcoin has bounced from $49,640, a key support level on the higher time frame. The breakout at $54,500 is an ideal accumulation point. Expect ranging between $54,500 and $60,700 in the coming weeks, with expansion likely after breaking $60,700. The liquidity chart shows BTC has tapped $48,000 lows. A retest from the $60,000 level is more probable.
2. Causes of the Dump
U.S. Economic Concerns: A weak jobs report has rattled global markets. A fragile US economy might lead the Fed to cut interest rates.
Japanese Economic Shift: The Bank of Japan's 0.25% rate hike impacted global markets, particularly the yen carry trade strategy.
ETH Sell-Off Fears: Jump Crypto moved over 120,000 staked ETH to exchanges, with $191M already deposited, creating sell-off concerns.
3. Crypto and Stocks Liquidations
Over $1B was liquidated in crypto as global markets suffered. On Aug. 5, a crypto market crash was triggered by Japan’s stock market plunge, liquidating nearly 300,000 traders. Bitcoin dropped from $65,000 to $50,000, resulting in $315 million in long position losses.
4. Japan's Economy
Japan’s Nikkei 225 dropped 12.4%. Investors borrowing from low-interest-rate countries like Japan and investing in higher-yield markets caused volatility. The Bank of Japan’s interest rate hike added to the market shock.
5. VIX
The VIX, representing S&P 500 volatility, spiked to its highest level since the pandemic. The Nikkei’s 12% plunge pushed the VIX higher, reflecting increased market uncertainty.
