Bitcoin's bearish trend: why cryptocurrencies have fallen in price so sharply

Crypto markets have finally come around: in recent weeks, a change in the price of major cryptocurrencies by even 5% was far from a frequent occurrence. But over the past seven days, the value of bitcoin has plummeted by more than 10%.

Bitcoin

After several weeks of low volatility, when the price of bitcoin practically did not change, the value of the first cryptocurrency collapsed by 10% at once. Almost the entire week was spent in the red zone, and the biggest fall was on Thursday, August 17, when BTC fell by more than 7%.

The first negative factor of such dynamics of the world's first cryptocurrency by capitalization was the news that Elon Musk's company Space X sold its savings in BTC in the amount of $373 million. The amount itself is significant, so even private investors, having learned about the sale, could quickly get rid of their bitcoins in a panic.

Another catalyst for negative dynamics could be the publication of the minutes of the July meeting of the Federal Reserve System (FRS). It once again emphasizes that further tightening of monetary policy is likely. In particular, the next interest rate increase is allowed.

In addition, the yield on U.S. government bonds reached its highest in the last 16 years - 4.31%. It is likely that investors are changing the focus of their attention from high-risk bitcoin with no income guarantees, to safer treasuries.

According to the technical analysis, there is a downward trend. This is evidenced by other indicators. The price is below the 50-day moving average (marked in blue). The RSI indicator has fallen below 30, which indicates oversold. However, if the fall is not fleeting, its signals should not be taken into account. But the ATR volatility indicator started to grow. However, it is unlikely that this state of affairs pleases crypto-enthusiasts. The nearest support level may be the minimum of June 2023 in the area of $24,800. The resistance level is the important psychological mark of $30,000.

Naturally, on the news of bitcoin's decline, the Fear and Greed Index sagged. During the week, the index lost 14 points, dropping from 51 to 37. This signals that fear is predominant in the current environment.

Ethereum

Similarly to bitcoin, ether also fell in price. Only its decline was somewhat less - about 8.33%. It is worth noting: during the trading session on August 17, ether fell by more than 16%, falling below $1,550.

The dynamics of Ethereum and other cryptocurrencies in many ways continue to repeat the movement of bitcoin. In this regard, the reasons for their decline are similar.

That said, there is some positive news regarding Ethereum. For example, with regard to futures ETFs. According to some sources close to the SEC, the regulator is not going to prevent the approval of new exchange-traded funds. The approval process will not be fast: the first results should be expected no earlier than October. At the same time, it is not yet reported which company's proposals will see the SEC's green light.

Last week, Ethereum projects that received funding in the second quarter of 2023 became known. There are 57 in total. The largest number (17) is in the category "Cryptography & zero knowledge proofs".

From the technical analysis point of view, the level, which was last week's support ($1,800), was broken and has now become a resistance level. The new support is the mark near $1,650.

Cardano

The decline in the value of the Cardano cryptocurrency for the week of August 11-18, 2023 was just under 10%. On August 17, the coin fell to its two-month low of $0.24. Overall, the correction has been going on for over a month now, having started in mid-July 2023.

The reason for Cardano's decline remains the actions of private investors with small capital. Large holders of ADA tokens, on the contrary, continue to increase their positions. According to data from analytics platform Santiment, the number of wallets holding 100,000 or more ADA tokens is 25,294. This is the highest number in the last 16 months. Obviously, big capital believes in Cardano's growth going forward, otherwise acquisitions are pointless.

The current environment clearly indicates the dominance of bears. Only 14 of the last 34 trading days ended in the plus. At the same time, only twice the growth amounted to more than 3%. The mark near 24 cents is a strong support level. It met on the chart for the second time in a week (the first time it was observed in December 2022). Resistance is the level around 30 cents - the price at which the March 2023 correction stopped.

Thus, the crypto markets ended a long standing still: cryptocurrencies collapsed amicably. This was facilitated by the statements of the U.S. Federal Reserve on the possible tightening of monetary policy, the sale of bitcoins worth $373 million by SpaceX and the rise in the yield of U.S. government bonds to a 16-year high.