Where will the bitcoin price go when the US dollar index reaches a 20-year high?
After the Federal Reserve strengthened its hawkish comments on the inflation outlook, risky assets were sold off comprehensively, and cryptocurrencies were still suffering from negative effects. Bitcoin's price trend has returned to the area below $20000, and traders and analysts are expected to retest the low point in June this year.
Although everything remained calm before the Fed's interest rate increase decision in September, there was still a lot of unease due to geopolitical uncertainty and persistent inflation. Investors wanted to know where BTC / USD might go in the next few days.
Spot price triggers $18000 target
BTC / USD sold sharply at the end of August 28, resulting in the lowest weekly closing price since early July. It is understandable that analysts are not too optimistic in the short term.
Trader Josh Rager concluded to twitter fans in an update over the weekend: "hopefully we can see a recovery this week, but the way the stock market closed on Friday doesn't look so good."
Nevertheless, the popular crypto trading account IL capo noted the possibility of squeezing the upside briefly before continuing the downward trend. He pointed out that the negative financing interest rate means that the derivatives market tends to lose money directly. He predicted that $23000 might reappear first.
He tweeted that "more people expect $19000 than $23000. Money speaks for itself. Also, there is a lot of liquidity above $21000."
In response, trader mark Cullen pointed out that traders "increased more BTC short positions in the region between $20100 and $20300."
In the call of $17000 or less, technical analyst GERT van Lagen gave a minimum target of $17500 for the daily chart.
At the same time, TMV crypto said that $18400 was a region worthy of attention.
Traders prepare for further decline in US stocks
The blockbuster speech delivered by US Federal Reserve Chairman Powell last Friday triggered a shock wave in global risky assets.
According to a statistic, Powell's eight minute speech has evaporated more than $2 trillion from the global stock market, of which $1.25 trillion has been evaporated from the US stock market alone.
Powell said, "at some point, as the monetary policy stance is further tightened, it may become appropriate to slow down the pace of interest rate hikes.".
Paul Christopher, head of global market strategy at Wells Fargo Investment Research Institute, warned in a speech on Bloomberg TV that the US stock market would fall further, and the S & P 500 index would fall below 4000 points next.
On the other hand, the inflation peak in July already indicates the macro low point of the stock market.
US dollar index hits 20-year high
A key factor in this week's stock market turmoil is still the strength of the US dollar.
As the US dollar index (DXY) hit a 20-year high this week, the negative correlation between us dollar performance and risky assets has become the focus of attention.
These highs are still continuing, and DXY has reached the highest peak of 109.47 since September 2002.
Raoul pal, founder of global macro investor, responded, "if the dollar continues to rise, it will really destroy the situation."
Micha ë l Van de Poppe was also shocked, saying that this was "a critical moment for the whole crypto market".
The soaring of the US dollar has also brought pain to the major legal currencies, especially the euro, whose exchange rate against the US dollar quickly fell below parity on August 29.
The European Central Bank and the Bank of Japan have been reluctant to push for interest rate hikes like the Federal Reserve, leading to inflation continuing to climb in the summer.
Mvrv-z index
The mvrv-z score indicator has prepared analysts for the bottom of prices since July, and now it has begun to decline, falling to the lowest level in a month.
Mvrv-z uses market value and realized price to determine the closeness of BTC / USD to its "fair value".
In July, it hit the potential BTC price floor of $15600, while briefly exiting the buying area, and then returned in the second half of August.
According to data from glassnode, a chain analysis company, the realized price is now about $21600.
"Extreme fear" returns
Perhaps not surprisingly, bitcoin fell below $20000, leading to its key market sentiment indicator returning to the most pessimistic level.
As of August 29, the crypto fear and greed index returned to the "extreme fear" field.
This year even witnessed the longest period of "extreme fear" in history, and the overall market sentiment score was only 6.
However, when analyzing the investor sentiment, chain research company santiment pointed out that a large number of investors are increasing their holdings rather than withdrawing their investments.
The agency commented on a chart in August: "bitcoin hovered around $20000 last weekend, and a positive sign is the increase in the number of key whale addresses. There is a correlation between the price of BTC and the number of addresses holding 100 to 10000 BTC, which has increased by 103 in the past 30 days."
Nevertheless, others believe that there is still a way to go before cryptocurrency demand reaches a real macro turning point
Although everything remained calm before the Fed's interest rate increase decision in September, there was still a lot of unease due to geopolitical uncertainty and persistent inflation. Investors wanted to know where BTC / USD might go in the next few days.
Spot price triggers $18000 target
BTC / USD sold sharply at the end of August 28, resulting in the lowest weekly closing price since early July. It is understandable that analysts are not too optimistic in the short term.
Trader Josh Rager concluded to twitter fans in an update over the weekend: "hopefully we can see a recovery this week, but the way the stock market closed on Friday doesn't look so good."
Nevertheless, the popular crypto trading account IL capo noted the possibility of squeezing the upside briefly before continuing the downward trend. He pointed out that the negative financing interest rate means that the derivatives market tends to lose money directly. He predicted that $23000 might reappear first.
He tweeted that "more people expect $19000 than $23000. Money speaks for itself. Also, there is a lot of liquidity above $21000."
In response, trader mark Cullen pointed out that traders "increased more BTC short positions in the region between $20100 and $20300."
In the call of $17000 or less, technical analyst GERT van Lagen gave a minimum target of $17500 for the daily chart.
At the same time, TMV crypto said that $18400 was a region worthy of attention.
Traders prepare for further decline in US stocks
The blockbuster speech delivered by US Federal Reserve Chairman Powell last Friday triggered a shock wave in global risky assets.
According to a statistic, Powell's eight minute speech has evaporated more than $2 trillion from the global stock market, of which $1.25 trillion has been evaporated from the US stock market alone.
Powell said, "at some point, as the monetary policy stance is further tightened, it may become appropriate to slow down the pace of interest rate hikes.".
Paul Christopher, head of global market strategy at Wells Fargo Investment Research Institute, warned in a speech on Bloomberg TV that the US stock market would fall further, and the S & P 500 index would fall below 4000 points next.
On the other hand, the inflation peak in July already indicates the macro low point of the stock market.
US dollar index hits 20-year high
A key factor in this week's stock market turmoil is still the strength of the US dollar.
As the US dollar index (DXY) hit a 20-year high this week, the negative correlation between us dollar performance and risky assets has become the focus of attention.
These highs are still continuing, and DXY has reached the highest peak of 109.47 since September 2002.
Raoul pal, founder of global macro investor, responded, "if the dollar continues to rise, it will really destroy the situation."
Micha ë l Van de Poppe was also shocked, saying that this was "a critical moment for the whole crypto market".
The soaring of the US dollar has also brought pain to the major legal currencies, especially the euro, whose exchange rate against the US dollar quickly fell below parity on August 29.
The European Central Bank and the Bank of Japan have been reluctant to push for interest rate hikes like the Federal Reserve, leading to inflation continuing to climb in the summer.
Mvrv-z index
The mvrv-z score indicator has prepared analysts for the bottom of prices since July, and now it has begun to decline, falling to the lowest level in a month.
Mvrv-z uses market value and realized price to determine the closeness of BTC / USD to its "fair value".
In July, it hit the potential BTC price floor of $15600, while briefly exiting the buying area, and then returned in the second half of August.
According to data from glassnode, a chain analysis company, the realized price is now about $21600.
"Extreme fear" returns
Perhaps not surprisingly, bitcoin fell below $20000, leading to its key market sentiment indicator returning to the most pessimistic level.
As of August 29, the crypto fear and greed index returned to the "extreme fear" field.
This year even witnessed the longest period of "extreme fear" in history, and the overall market sentiment score was only 6.
However, when analyzing the investor sentiment, chain research company santiment pointed out that a large number of investors are increasing their holdings rather than withdrawing their investments.
The agency commented on a chart in August: "bitcoin hovered around $20000 last weekend, and a positive sign is the increase in the number of key whale addresses. There is a correlation between the price of BTC and the number of addresses holding 100 to 10000 BTC, which has increased by 103 in the past 30 days."
Nevertheless, others believe that there is still a way to go before cryptocurrency demand reaches a real macro turning point