After touching recent highs of $64,653 for bitcoin and $2,815 for ethereum, in a sudden retracement, the cryptocurrency market retreated sharply on Thursday, with bitcoin losing more than 6% and ethereum falling more than 7%.
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bitcoin–ethereum-september-2024-crypto-market-outlook/” target=”_blank” rel=”nofollow”>This sudden fall It has left many analysts and investors wondering about the future course of some of the leading digital assets, underlining how volatile the market is due to macroeconomic events and changing moods among investors.
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The latest pullback in cryptocurrencies comes after buyers poured into exchanges like twitter.com/dYdX?ref_src=twsrc%5Etfw” rel=”nofollow”>@dYdX at the fastest rate since bitcoin's all-time high in March. Greed suddenly took hold of the coin on August 25, and liquidations occurred quickly. When funding rates become extreme in either of the two… image.twitter.com/siXhAI46VQ
— Santiment (@santimentfeed) twitter.com/santimentfeed/status/1828560155790975144?ref_src=twsrc%5Etfw” rel=”nofollow”>August 27, 2024
Meanwhile, according to figures provided by Santiment, long positions have been occurring at the fastest pace since bitcoin's peak in March, which is indicative of a rise in market optimism (or perhaps greed) around August 25.
The wave of liquidations seemed to take the cryptocurrency market by surprise, completely destroying its optimistic sentiment and leading to a sharp correction, as is typical for wild swings in cryptocurrencies. Santiment claims that such sudden market changes are often driven by excessive leverage, such as when imbalanced funding rates herald an impending correction by resetting the market.
Economic factors at play
Similarly, speculation about US monetary policy is one of the key drivers of this recent change in prices. bitcoin–btc-dips-below-60-000-ether-eth-sinks-as-crypto-market-wobbles” target=”_blank” rel=”nofollow”>Federal Reserve Chairman Jerome Powell hinted at a possible interest rate cut this year at the last meeting, adding further fuel to speculation about increased market liquidity.
Since the US dollar traditionally weakens when interest rates are low, cryptocurrencies are more attractive to investors.
According to Ryan Lee, chief analyst at Bitget Research, bitcoin-price-index/” target=”_blank” rel=”nofollow”>bitcoin can range from $54,000 to $72,000, while ethereum/” target=”_blank” rel=”nofollow”>ethereum It could range between $2,250 and $3,350 in September. But again, this is not without caveats, as the market is always open to surprises that could change this trend.
Trading volume and market activity
However, despite the declines, trading volume has increased. While increased trading volume could indicate panic selling by investors trying to cut their losses, it could also be interpreted as the opposite: that investors are feeling optimistic and are buying at prices they perceive as undervalued in anticipation of a market recovery.
For example, the Trading volume The bitcoin price has surpassed $30.5 billion, an increase of 30%. This also usually means that some traders are closing their positions while others are benefiting from the large discount rates. The market's reaction to this development will ultimately determine the price of bitcoin.bitcoin-and-ethereum-prices-keep-falling” target=”_blank” rel=”nofollow”> address Both bitcoin and ethereum travel.
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ethereum network activity drops
ethereum’s problems go beyond price volatility. Over the past month, daily transaction volumes have dropped by 55%. This drop in network activity raises concerns about the health of the ethereum ecosystem.
ethereum's transaction volume fell from $134.71 billion in July to $91.46 billion in August. The platform's monthly transactions have dropped to their lowest level since May 2020, indicating a lack of interest.
Analysts say this may be cyclical. The current environment is not conducive to attracting network workers.
Featured image from Flickr, chart from TradingView
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