The bitcoin market experienced a significant drop earlier this week, attributed to concerns over the US economic outlook and increased volatility in financial markets in general. In particular, ethereum’s performance lagged, possibly influenced by increased activity in the futures market and selling pressure from some large holders.
Despite these challenges, asset manager and exchange-traded fund (ETF) issuer Grayscale remains optimistic about the potential for token valuations to recover if the U.S. economy continues its trajectory toward a “soft landing.” Even in a weak economic scenario, Grayscale suggests that the downside risk Cryptocurrency prices may be more subdued compared to previous instances.
Analysis of the factors behind the declines of btc and eth
According to a recent study investigation According to the asset manager, the catalyst for the recent market contraction was the publication of a disappointing US employment report for July, released on August 2.
This report revealed a rise in the unemployment rate, reminiscent of patterns seen in past recessions. As a result, concerns about a possible economic slowdown led to lower performance of cyclical assets such as actionswhile traditional safe haven assets such as US Treasury bonds, the Japanese yen and the Swiss franc saw increased demand.
Related reading
Within the cryptocurrency market, both bitcoin and ethereum experienced significant declines, with ethereum notably underperforming other digital assets and traditional market segments, partly attributed to significant long positions in perpetual futures, which were liquidated during the downturn, exacerbating the price decline.
Furthermore, the market witnessed a sudden 7.6% drop in the price of ethereum during a brief three-minute period on August 4, with liquidations for a total of $340 million that day alone.
Factors contributing to ethereum’s poor performance included selling pressure from prominent holders such as Jump crypto, Paradigm, and Golem Network, along with changes in ethereum’s staking reward rate and validator activity.
bitcoin's Road to $100,000
As broader financial markets stabilized last week, the VIX index, a measure of U.S. stocks market volatilityshowed a notable decline after peaking earlier in the week, Grayscale noted.
Market stability going forward depends on upcoming macroeconomic data, corporate earnings releases, and potential policy responses from central banks like the Federal Reserve.
Looking ahead, Grayscale anticipates that if the US economy avoids a recession and maintains a path toward a controlled slowdown, token valuations could recover, and bitcoin could retest its previous level. Historical maximum.
The firm also highlights factors such as steady demand for newly listed US ETFs, limited credit exposure from central financial institutions and subdued altcoin returns as potential stabilizing influences on the market.
Related reading
Similarly, market analyst CryptoCon x.com/CryptoCon_/status/1821951850121179380″ target=”_blank” rel=”nofollow”>claims that the 3.618 Fibonacci extension has accurately found every local top in the current market cycle, with a 52% upside expected and the .618 extension poised to break above the $100,000 milestone.
CryptoCon notes that if the “one-month delay in 2023” continues, the market’s largest cryptocurrency could potentially reach over $100,000 by the end of the year after the pullbacks of the past few months.
At the time of writing, btc is struggling to maintain consolidation above the key $60,000 level, falling nearly 1% from Thursday’s high of $62,8000 to trade at $59,970.
Featured image of DALL-E, chart from TradingView.com
