Cryptocurrencies are facing a very critical period of time with much uncertainty around what happens the next day. On Friday, Bitcoin fell to its lowest level below $20,000 amid a sudden crypto sell-off. The fears looming around inflation and the crypto market volatility indicates a much tense week ahead. However, today, the market has shown signs of recovery over the last 24 hours.
Last Week in Review
Last week on 26th August, an important economic event took place in Jackson Hole, USA. The US Federal Reserve, already dealing with taming inflation in the biggest economy of the world, has made more comments that have created a scenario of fear, uncertainty and doubts.
Jerome Powell, chair of the Federal Reserve, said that containing the inflation might mean a period of chaos for households and businesses.
“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation, but a failure to restore price stability would mean far greater pain,” said Powell at the Jackson Hole Conference.
After Powell’s speech, the stock market started showing signs of a slowdown and the crypto market followed suit. The total crypto market cap fell below the $1 Trillion mark on 27th August 2022.
The crypto fear and greed index is a major resource for carrying out sentiment analysis, and by the looks of it, last month’s high optimism has slowly faded off. The value has been reduced to 27, again in the ‘Extreme Fear’ zone.
Last Friday, Bitcoin saw a sudden fall from $22,000 levels to below $21,000 over a very short time. Susannah Streeter, an analyst at Hargreaves Lansdown, told CNBC that the reasons for the crash could be a big transaction since the cryptocurrencies showed a ‘flash and crash’ pattern. Streeter also pointed out that the downward trend appeared first in Cardano (ADA), then by the bigger coins like Bitcoin and Ether.
Even between fears and uncertainty, many experts are pushing that this might be a good time to buy Bitcoin. Charles Edwards, inventor of hash ribbons and founder of Capriole Investments, recently told the Bitcoin Magazine that Bitcoin might finally have bottomed out and this is why the current period could be a good entry point. Hash ribbons are an indicator to show long-term bottoming out of Bitcoin, identifying a buying opportunity.
On the Road to Recovery
Last week’s performance of top coins was a bit disappointing but now the market has shown some recovery. According to CoinGecko, the global cryptocurrency market cap is now $1.04 trillion, a 4.27% decrease from the last 24 hours and a 50.27% decrease from a year ago. Bitcoin (BTC) currently has a market cap of $396 billion, representing a 38.01% dominance.
Today’s at the time of writing Bitcoin (BTC) is now trading at the $20,000 level and Ether (ETH)’s price is moving at $1,500 level. XRP and ADA have also shown a sign of recovery, moving up more than 3% and 5% respectively.
Please note that this is not trading advice. We recommend you to carry out your own research before making any trading decisions. This article is for informational purposes only.