It was a sea of red in the cryptocurrency market on Aug. 16 as Bitcoin dropped below the key support level of $58,000.
Most altcoins were deep in the red, remaining in a bear market. Celestia (TIA) was one of the worst performers, now down for three consecutive days. It fell to $5.10, down by over 75% from its highest point this year.
TIA, WIF, ENA, and SUI are leading losses
Dogwifhat (WIF), the popular meme coin, dropped for four straight days and is down by over 71% from its all-time high. Similarly, cryptocurrencies like Pepe (PEPE), Ethena (ENA), and Sui (SUI) dropped by more than 10% in 24 hours.
Bitcoin (BTC) and many altcoins have retreated even as broad market conditions have improved. The US dollar index has dropped to $102, while US equities are on track for their best week in months.
There are several possible reasons for this price action. First, many traders are likely keeping away from crypto after the substantial liquidations that occurred on Aug. 5, when digital currencies and stocks plunged.
Data by CoinGlass shows that total bullish liquidations stood at over $700 million on that day. A likely indication of this is that Bitcoin’s open interest in the futures market has stalled at $69 billion this week. Additionally, the volume of cryptocurrencies traded on major DEX and CEX exchanges has dropped by double digits in the past few days.
Second, there is no clear catalyst traders can get behind and bears can’t ignore. Earlier this year, the narratives focused on Bitcoin and Ethereum ETFs and the Bitcoin halving event, which have all taken place.
Third, there are technical concerns in the market now that BTC and Ether have formed a death cross pattern.
Analysts are bullish on crypto
Still, some analysts believe that Bitcoin and other cryptocurrencies will bounce back later this year. In a note, Michael van de Poppe, a popular crypto analyst, predicted that the rebound will start to happen in September.
— Michaël van de Poppe (@CryptoMichNL) August 15, 2024The final weeks of pain are happening on the markets.
From September onwards, it's again the best period of the cycle for #Bitcoin & #Crypto.
BTC valuations are slowly grinding upwards already.
In a separate but similar tone, Miles Deutscher, another analyst, noted that investors were slowly accumulating, a move that could lead to a strong comeback later this year.
— Miles Deutscher (@milesdeutscher) August 14, 2024This feels eerily similar to August-October last year.
• Retail interest is evaporating fast (YT views have fallen off a cliff over the past week)
• Apathy amongst existing market participants
• Lack of clear narratives(and the #Bitcoin price action looks identical too) pic.twitter.com/Y37iDoeSOl
Some companies have already started buying Bitcoin. Marathon Digital has pushed its total holdings to over 25,000 while firms like Goldman Sachs and Nomura have acquired spot Bitcoin ETFs.
Additionally, the Federal Reserve is set to join other central banks like the European Central Bank and Bank of England in cutting interest rates. US politicians have also become more bullish on Bitcoin, with Chuck Schumer working on a crypto regulation bill. All these factors could lead to a BTC and altcoin comeback.