Bitcoin sharply dropped to around 110,000 USD, pulling the cryptocurrency market down amid forced liquidation waves that increased derivatives market volatility.
The market is under significant pressure due to the recently released U.S. economic data, which increases macro concerns, prompting investors to heighten risk protection demand and pushing short-term volatility higher.
MAIN CONTENT
Bitcoin dropped near 110,000 USD, dragging down the entire cryptocurrency market.
Price volatility skyrocketed, with liquidation of margin positions exceeding 900 million USD in 24 hours.
Technical risks are high, with important support zones at 103,700 USD and 100,800 USD.
How did Bitcoin and the cryptocurrency market fluctuate over the past week?
Bitcoin had a weak start to the week, dropping to around 110,000 USD, causing the entire market to decline, along with a significant increase in volatility. Ethereum also experienced nearly double the volatility compared to the previous week.
The Block recorded liquidation of margin positions exceeding 900 million USD in 24 hours, mostly from long positions. Sean Dawson, head of research at Derive.xyz, stated that the daily volatility of Bitcoin and Ethereum has increased from 15% and 41% to 38% and 70%, respectively. Pressure from U.S. producer price data being higher than expected has raised concerns about macroeconomic factors, prompting traders to be more cautious.
What is the impact of U.S. economic data on market sentiment and trends?
U.S. producer price index data higher than expected raises concerns about economic health, prompting investors to increase demand for risk protection. The market expects U.S. GDP data on August 28 and early September employment data to continue to significantly affect price trends.
Analysis from the options market shows cautious developments: the 25-delta skew has turned negative, and strong demand for put options has emerged – indicating the largest risk-averse demand in the past two weeks. This statistic shows that market sentiment leans towards a scenario where prices continue to test the 100,000 USD mark for Bitcoin and 4,000 USD for Ethereum in September.
What leverage adjustments and technical risks are being warned about?
Data from Glassnode shows that open interest in Bitcoin futures decreased by 2.6% while long position funding rates increased by 29%, implying uneven leverage adjustment and pressure from leveraged funds.
Timothy Misir, Director of Research at BRN, commented that the market decline stems from leveraged funds liquidating positions. If Bitcoin cannot maintain the price range near 110,000 USD, technical indicators will be very fragile. Two important technical levels are 103,700 USD and 100,800 USD; breaching these levels could threaten the current bullish market structure. However, corporate investment funds and Wall Street financiers are still actively seeking bottom opportunities amid strong market fluctuations.
"If Bitcoin does not maintain a level near 110,000 USD, technical signals will weaken and the risk of a price drop will increase further."
– Timothy Misir, Director of Research at BRN Research, August 2024
What could be the next volatility scenarios for Bitcoin?
The market is in a very sensitive phase regarding volatility. Large liquidations and increased risk protection demand have pushed price volatility to unprecedented highs in the short term. Many analysts forecast that Bitcoin may test the 100,000 USD threshold before recovering or establishing a new trend.
The options market also shows a bias and a strong increase in put option demand, reflecting a prevailing risk-averse sentiment. This is an important technical factor that helps investors orient appropriate strategies in upcoming trading sessions.
Frequently Asked Questions
How does Bitcoin affect the entire cryptocurrency market when it sharply declines?
Bitcoin has a large market share, so a price drop will pull down the prices of other cryptocurrencies, causing significant volatility in the derivatives market and increasing the risk of margin position liquidation.
What are the main reasons for the strong volatility of Bitcoin and Ethereum?
Liquidation of large margin positions and disappointing U.S. economic data raise macro concerns, causing investors to increase risk protection demand, leading to a rapid increase in short-term price volatility.
What is the current important technical support level for Bitcoin?
Key support levels are at 103,700 USD and 100,800 USD; breaches could break the bullish structure and lead to deeper downward trends.
What information indicates that investor sentiment is cautious?
Negative 25-delta skew and high put option demand indicate that investors are seeking strong risk protection ahead of upcoming volatility.
Will large funds take advantage of opportunities during this period?
Corporate funds and investors on Wall Street are engaging in selective trades to 'catch the bottom' amid significant market fluctuations and recovery potential.
Source: https://tintucbitcoin.com/crypto-lao-doc-thanh-ly-don-bay-lon/
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