Bitcoin once fell below 56,000, and the entire network exploded with 200 million magnesium
At the beginning of September, the price of Bitcoin ($BTC) fell sharply. Although it once exceeded $59,000, it fell to a low of $55,568 as of writing this morning (4th), and then rebounded. The current price is 56,694. Dollar.
When the market went down, the cryptocurrency leveraged contract market also saw a liquidation of over 100 million US dollars. CoinGlass data shows that more than 70,000 people across the entire network have been liquidated in the past 24 hours, with the total liquidation amount approaching US$200 million. Bulls suffered heavy losses, with long positions (buy orders) across the entire network liquidated to US$169 million, of which long Bitcoin orders liquidated US$53.6 million.
Figure source: CoinGlass cryptocurrency leverage contract market liquidation data in the past 24 hours
Why is Bitcoin falling? Sort out the reasons for the decline
Why has Bitcoin fallen recently? "CryptoCity" compiled the opinions of foreign media and industry professionals, as follows:
1. The Bank of Japan hints at further interest rate hikes
In a document submitted to a government panel chaired by Prime Minister Fumio Kishida, Bank of Japan (BoJ) President Kazuo Ueda reiterated July's policy decision, saying that if the economy and price performance are in line with expectations, the central bank will continue to raise interest rates, causing the yen to weaken against the dollar. It briefly rose to 145.1 from 147.2 on September 2.
Ueda Kazuo's remarks are reminiscent of the scene at the end of July when the Bank of Japan decided to raise interest rates. At that time, due to the unwinding of the Japanese yen arbitrage trade and the return of the Japanese yen, risky assets such as Bitcoin and stocks experienced huge fluctuations. On August 5, Bitcoin even fell to $49,000.
2. The U.S. manufacturing index shrank for 3 consecutive months
According to "Cointelegraph", the U.S. manufacturing index (PMI) announced last night was 47.2 points in August, lower than the expected 47.5 points. The new orders index also fell to 44.6 points from 47.4 points in July, shrinking for three consecutive months, indicating that the U.S. supply market is weaker than expected.
Although weak economic data has raised expectations for an interest rate cut by the U.S. Federal Reserve (Fed), the market is now concerned about the magnitude of the rate cut. CME FedWatch data shows that the market is certain that the Federal Reserve will cut interest rates by one point at the September interest rate decision, but the chance of a two-point cut at once is only 37%.
Source: FedWatch U.S. Federal Reserve’s September interest rate cut probability forecast
3. Panic meets low liquidity and low turnover rate
Lin Chen, head of Asia-Pacific commerce at cryptocurrency derivatives exchange Deribit, said on September 2 that in the past month, the market greed index showed fear sentiment for 23 days, accounting for 76.67%. This caused a large number of short-term investors to panic and leave the market after the price of Bitcoin fell below $58,000.
Lin Chen believes that this reflects that the current market is mainly dominated by emotions. In the case of low liquidity and low turnover rate, many investors choose to wait and see, and even quickly withdraw when the price drops slightly, indicating that the market may be experiencing a bottoming stage.
Source: XDeribit Asia Pacific Business Leader analyzes market psychology
Does Weak Market Structure Foreshadow a Deep Correction?
"Cointelegraph" analyst Nancy Lubale said that judging from the weekly trend of the total market capitalization of cryptocurrencies, the cryptocurrency market is currently in a correction in the downward channel mode. The total cryptocurrency market capitalization has fallen by 27% since March, falling below key support at $2.2 trillion and the midline of the channel at $2.108 trillion.
The relative strength index (RSI) is at 45, which means sellers are dominating the market. If selling activity continues, the cryptocurrency market cap could fall further to around $1.875 trillion in the coming weeks.
However, a break above the mid-term trendline could push the market cap back above the trendline, around $2.341 trillion.
Chart source: Cointelegraph weekly trend of total cryptocurrency market capitalization
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
