Posted 11 months ago | by Ben Armstrong
Where are the Crypto Markets Headed?
Across the world, crypto investors are holding their breath, and keeping an eye on as the Bitcoin price – which is testing the $10,000 level.
Since the middle of August, Bitcoin has been selling off – although most risk assets are under pressure. The EURUSD pair, which looks to be closely tied to risk sentiment, has been putting in that could be a top for more than a month.
Some experts and professional speculators claim that if the price fails to recover in a couple of days, Bitcoin might keep sinking, possibly down to below $10,000.
If this is the case, it is very likely that overall markets will fall, and we will see a big rise in both the USD and JPY – both of which have been under pressure since central banks stepped in earlier this year to bailout markets.
Crypto May be Caught in a Larger Financial Storm
Some sources reveal that public opinion is much more positive. According to recorded data on Glassnode, there has been a bulge in the number of “accumulation addresses”, which refer to wallet addresses that buy – but rarely sell – BTC.
While Bitcoin price keeps trending lower, accumulation addresses have been rising. This signal may indicate the investors’ optimism and belief that these recent bears could stop and the market will be positive in the medium term.
There are some other factors that could be influencing tokens as well. The crypto complex has been up for most of the summer, and there may be an inclination for speculators to take some profits off the table. This appears to be happening in the global equity markets, which have been under pressure over the last week.
A Deeper Drop is Possible
If cryptos are taking their price cues from the established financial markets, then we could be looking at a much deeper fall in prices. While there are certainly buyers for major crypto assets, they are unlikely to flood the market with buy orders if further weakness across the broad markets is expected.
Unlike stocks, alternative assets like cryptos don't have a buyer of last resort to enter the marketplace, and provide emergency liquidity. This could lead to a steep selloff in cryptos if established markets tank, as was the case this past spring.
The irony in this situation is that if cryptos are dragged down by weakness in risk assets, it is likely to become a fundamental driver for higher crypto prices.
There is no doubt that global central banks will step in with more EZ money in the event of another downdraft, which will make alternative assets look more attractive over a longer timeframe.
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