Cryptocurrency markets are in slaughter on Monday. Due to global macroeconomic situations, the market is having a crisis possessing its $900 billion worth. In anticipation of the US Fed’s monetary policy decisions in the face of growing inflation, investors remained cautious.
Bitcoin, the most popular cryptocurrency, has slumped to a three-month low, while Ethereum has lost more than 8% of its value recently. The hype around Ethereum Merge has decreased as a result of the decrease in market triggers. In addition, the rise of the US dollar has weakened the environment of international markets, making cryptocurrencies vulnerable.
The worldwide crypto market valuation was $914.50 billion when writing on CoinMarketCap, down 5.56% from the previous day. However, during the last 24 hours, the entire cryptocurrency market has grown by 66.3% to $81.92 billion.
DeFi’s total 24-hour volume is $5.84 billion, approximately 7.13% of the whole crypto market. However, the total amount of stablecoins is present at $74.80 billion, which represents 91.30% of the said 24-hour value of the whole crypto market.
Fears that Bitcoin will test its annual lows cause another drop.
Ethereum was trading at $1,314 and down by 8.44%, while Bitcoin was trading around $18,765.08, down by 6.04%. Other significant cryptocurrencies, including Solana, XRP, BNB, Dogecoin, and Cardano, had 4-8% declines.
At this moment, Bitcoin’s dominance was 39.34%, down 0.19% from the previous day.
Bitcoin and Ethereum saw losses of about 16% and 25% during the past week, respectively.
The $18k levels are still in place, but the general view is still gloomy unless Bitcoin can convincingly break over higher levels and retake $19,000.
Prices might drop below $15k and lower shortly if the price drops below $18,000, setting off a carnage in the market.
The monthly chart displays a gloomy perspective as long as the price is rejected at crucial support levels.
While it appeared that prices were consolidating from September 13 and 18, bears now seem to be in charge; as the charts deteriorate, investors fear that further declines may be imminent.
The Relative Strength Index evokes a negative attitude. Moreover, the indication indicates that a decline, anticipated to last for the foreseeable future, is the most likely scenario.
The bears will continue to be in charge as the selling pressure increases. The bearish view is further supported by the moving average convergence divergence (MACD) reading below the signal line.
Since no promising improvements are anticipated to support the price, the market might keep losing money. But there are several bearish elements at work.
Analysts at Goldman Sachs are pessimistic about Bitcoin
Institutional investors have flocked to the cryptocurrency market in droves over the past year, with the majority choosing to let customers purchase Bitcoin to increase their exposure to the digital asset.
One institutional investor in Bitcoin is Goldman Sachs, and according to its experts, the currency is now in a negative trend. The analysts at Goldman Sachs, led by Jan Hatzius, have projected what would happen to the price of Bitcoin once the Federal Reserve continues to raise interest rates.
According to their predictions, the Federal Reserve will raise interest rates twice, once by 0.75% in September and once by 0.50% in November.
To curb the growing inflation rates, the Federal Reserve has now been hiking interest rates. The increase in interest rates has had a substantial impact on Bitcoin’s price changes this year. Investors have been prompted by the action to leave risky assets in favor of certain assets like cash.
At the moment, Bitcoin is down by more than 70% from its all-time high set in November last year and over $50k at the beginning of 2022. (below).
Some analysts think a bottom has been struck as the price sways around the $18,000 mark. But more drops may occur if the Fed keeps hiking interest rates.
The relationship between bitcoin and the US equity markets has also strengthened. However, since the Nasdaq Composite Index significantly impacts Bitcoin prices, further corrections may be in store, given the current upward trend.
Sharon Bell, a strategist at Goldman Sachs, believes that the recent ascent in the stock market might be a bull trap and warns that when the Federal Reserve increases interest rates more aggressively, equity prices could fall by 26%.
Investors in bitcoin options predict a decline to $10,000–$12,000.
The options on Bitcoin, which will run out at the end of the year, provide another gloomy macro view. According to the possibilities, most traders believe that Bitcoin would eventually fall to a price between $10,000 and $12,000.
The call options with a $45,000 strike price are the most heavily weighted at a call-to-put open interest ratio of 1.90 on September 18. The percentage of put options to call options at the market price from $10,000 and $23,000, on the other hand, is four to three, indicating a more plausible negative outlook.
Overview of other coins in the cryptocurrency market at the moment
Helium is up 4% in the cryptocurrency market, Terra Classic is up 1%, and Neutrino is up more than 1%. The top performing coins were Ethereum Classic, which fell by about 13%, EOS, Curve DAO Token, Celsius, Kusama, and Ravencoin, which fell by almost 11–12%.
Rajagopal Menon, VP of WazirX, commented on the success of the cryptocurrency market by saying, “Since its meeting in March of this year, the Fed has been aggressively hiking interest rates to control inflation.
The US’s higher-than-expected August CPI inflation numbers have rekindled concerns that interest rate rises will continue to dominate the world economy. This week, the US Dollar Index DXY had another uptick and is currently very close to 110. The stock market and the cryptocurrency market have both been influenced by this news.”
Menon said, “Following the Merge completion, other cryptocurrencies’ values plummeted. Moreover, since the merger-related commotion subsided, short-term investors have dumped their holdings following the occurrence.
The monetary policy of the US Federal Reserve will start on September 20 and 21. In August 2022, US inflation was reported at 8.3%, more than anticipated.
Ethereum finally made the switch to Merge last week. With the latest version, Ethereum has fully adopted proof-of-stake consensus, formally deprecating proof-of-work and consuming 99.95% less energy. Many had anticipated that the debut of the Merge would boost the cryptocurrency market, but analysts think the improvement occurred at the wrong moment when markets were weak.
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