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It's Only up for Bitcoin (BTC) as It Reached Fundamental Support: Crypto Market Review, August 29


u.today 29 August 2022 14:42, UTC
Reading time: ~2 m

Jerome Powell's livestream was enough to cause billions of damages to both the financial and digital assets market. Following the chairman's forecast, most risk-on assets took another blow and tumbled back to June’s levels, and Bitcoin is no exception.

What's next for digital gold?

With the plunge to $20,000, Bitcoin has entered an accumulation range formed back in June when the price of the first cryptocurrency consolidated in the $17,000-$20,000 range. With the help of retail investors who bet on the long-term reversal of the asset, we saw a bounce to $25,000.

Since BTC failed to deliver on the expectations of those who grabbed the asset at the average price of $18,000, we are less likely to see a repeat of this scenario if the coin drops back to the values we saw back in June.

Bitcoin chart

One way or another, Bitcoin's inability to reach new highs during the most recent rally does not mean that we will not see a spike in buying volume. At this time, BTC might enter a reversal for a different reason.

According to funding rates on the biggest derivatives trading platforms like Binance and Deribit, the number of short orders dominates over longs, which means that bears are paying bulls to open longs. Such a state of things shows the possibility of a short squeeze if unexpected buying power occurs on the market.

For now, Bitcoin's volatility returned to the extremely low level we saw between Aug. 21 and Aug. 25. The drop in volatility suggests that traders and investors are not yet ready to support the reversal of the first cryptocurrency.

What's there for altcoins?

As expected, alternative cryptocurrencies are following Bitcoin and showing an absence of upwards momentum. Obviously, the main reason behind it is massive outflows from the market.

Unfortunately, there are no factors that might give us a hint of a potential change in the situation as the market no longer expects much from the Merge update, while Ether lacks network usage and is seeing a crucial drop in revenue.

Meanwhile, the scandal around AAVE cryptocurrency broke out as CryptoLeaks revealed that Ava Labs urged lawyers to attack competitors like Solana and Binance to affect their development pace. Following the release of the article, AVAX saw a flash-crash, with the value of the token tumbling down by 20% in two days.

While the story most certainly fueled the plunge of the token's value, the main reason behind the drop is the situation on the market and Bitcoin's nosedive.

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