Market Review
On Tuesday, the U.S. dollar index oscillated around the 98 mark, ultimately closing up 0.12% at 98.24; the benchmark 10-year U.S. Treasury yield closed at 4.309%, and the 2-year U.S. Treasury yield closed at 3.759%.
The Dow Jones Industrial Average rose slightly by 0.02%, the S&P 500 index fell by 0.59%, and the Nasdaq dropped by 1.46%. Intel (INTC.O) rose by 6.97%, Nvidia (NVDA.O) fell by over 3%, and Meta Platforms (META.O) fell by 2%. The Nasdaq China's Golden Dragon Index closed down by 0.9%, while NIO (NIO.N) and Xpeng Motors (XPEV.N) both rose by 4%.
Bitcoin continued to pull back after breaking the historical high of $124,500 on August 14. As of August 20, 1:40 PM, Bitcoin dipped below $115,000, with a drop of nearly 3% within 24 hours; Ethereum fell below $4,300, with a drop of over 6% within 24 hours. Overall, this round of cryptocurrency pullback is mainly driven by a resonance of macro expectations and technical factors.
On one hand, the U.S. July Producer Price Index (PPI) surged by 3.3% year-on-year (expected 2.5%), and the market's expectation for a rate cut by the Federal Reserve in September dropped from 98% to 84%, reducing the attractiveness of risk assets; on the other hand, both Bitcoin and Ethereum reached historical highs in August, prompting some investors to cash out. The cascading effect of profit-taking and leveraged liquidations further exacerbated the decline, resulting in a 'stair-step' drop in prices.
Ethereum maintains a high correlation with Bitcoin under the simultaneous influence of capital momentum and market sentiment. In the last 24 hours, a total of 128,080 people were liquidated globally, with a total liquidation amount of $450 million. The largest single liquidation occurred on Binance - BTCUSDT worth $9.6953 million.
In fact, a deep pullback in cryptocurrencies is the norm. In mid-March 2020, a global liquidity crisis erupted, U.S. stocks experienced consecutive circuit breakers, traders sold all risk assets to return to dollars, and Bitcoin fell more than 40% in two days, while Ethereum dropped nearly 50%. During this period, a large number of leveraged long positions were automatically liquidated, further amplifying the downward pressure. This was also the first time the cryptocurrency market truly experienced a systemic shock from the global financial market. In November 2022, the cryptocurrency exchange FTX declared bankruptcy due to misappropriation of customer assets, directly triggering a trust crisis in the market, with Bitcoin dropping to a low of about $15,000, a plunge of 55%; Ethereum fell to about $1,100, a drop of 60%. In addition, Tesla's suspension of Bitcoin payments in May 2021, Celsius and Three Arrows Capital's chain liquidation in June 2022, and the adjustment of the funding structure of crypto ETFs (exchange-traded funds) in early 2024 have all triggered significant pullbacks in cryptocurrencies.
The prices of Bitcoin and Ethereum have recently experienced a pullback, with profit-taking being one of the important factors. A considerable amount of profit has accumulated in the short-term market, and some investors choose to take profits at high levels, resulting in some selling pressure. Meanwhile, with the rapid rise of the market earlier, the market's leverage level is relatively high, and the pullback phase is accompanied by a deleveraging process, further amplifying price volatility.
This cryptocurrency pullback is caused by multiple overlapping factors. On the macro front, the U.S. July PPI data exceeded market expectations, leading traders to lower their bets on significant interest rate cuts by the Federal Reserve, putting pressure on risk assets and making market sentiment cautious. At the same time, with the Jackson Hole global central bank annual meeting approaching, the market's repeated pricing of the Federal Reserve's future policy path has increased short-term uncertainty.
Yesterday's article saw a double whammy for bulls and bears, and the current Ethereum long positions are showing slight profits. For details, see '8.19 Main Force Escape? Cryptocurrency Plunges Before Powell's Speech: Bitcoin and Ethereum Market Analysis and Trading Suggestions!'
The main operation loop for the day is to go long, bottom fishing is fine, and directly go long in the short-term loop at 4140-4120; currently, the short-term is at 4230; breaking 4250 can directly look at $4380. The medium-term long position will not have real-time reminders, please communicate directly with me. This round of pullback has just retraced to the 50% level of the golden ratio (4070 USD) as mentioned yesterday; subsequent tracking of price fluctuations will not have real-time reminders due to rapid market movements, so please pay attention to controlling risks and taking profits. An increase above $4070 is expected to lead to a stronger upward movement, and stabilizing at $4400 will likely challenge new highs again. Whether it can reach historical highs or even above $5000, we look forward to it.
Risk warning and disclaimer: The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account individual users' specific investment goals, financial conditions, or needs. Users should consider whether any opinions, views, or conclusions in this article are consistent with their specific circumstances. Investing based on this is at your own risk.
Dear partners in the circle, we have witnessed the ups and downs of the cryptocurrency market together. May we continue to explore this fascinating field hand in hand in the days to come. May every trade be a crystallization of wisdom, and may every wait bring joy of harvest. Follow Orange Brother, and wish everyone a smooth journey in the crypto world, creating brilliance together.
