Crypto Market Review, 22 August
Short orders dominate the market as investors brace for June-like declines
The beginning of the week was not as smooth as most investors and traders expected, as the dominance of bears in the market increased exponentially: exchanges pay for opening longs, the number of shorts blows through the roof, and most cryptocurrencies plunge.
Bitcoin on its way to $20,000
Since August 14, BTC has lost more than 12% of its value, after falling away from the ascending wedge that served as a guide for the asset’s price since early July. As various sentiment indicators suggested, the market was gradually recovering and betting on the upcoming reversal rally and the end of the long-term bear market.
Unfortunately, the number of different macro and technical factors suggested that the price of the first cryptocurrency will not recover as quickly as some market participants thought. With the rise of the US dollar, tremendous pressure emerged in the digital asset market as investors moved their money away from risky investment tools like crypto.
Technical tools such as the volume profile also hinted at the coming fading of the rally. The lack of trading volume after the first cryptocurrency fell below the wedge pattern shows that the majority of retail and institutional investors are unwilling to accumulate more BTC, most likely due to the possibility of another dive to the June lows.
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For now, Bitcoin fell even further and tested the price range of $20,000. Fortunately, investors pushed the first cryptocurrency back above the $21,000 threshold. The most likely scenario after the plunge is consolidation, which will show the intentions of the market.
Bjørn dominates
According to funding rates on exchanges and the number of short and long orders on derivatives trading platforms, bears clearly dominate the market as the majority of open positions are shorts.
The reason behind the negativity is the likelihood of another fall similar to what we saw in June. On May 13, Bitcoin entered the ascending consolidation area, and the market expected a gradual recovery after that. Unfortunately, the first cryptocurrency found no support and crashed, losing more than 40% of its value at the time.
The scenario today is somewhat similar to the May-June period, as Bitcoin has also exited the rising territory and is now rapidly losing its value. The main difference between the two scenarios is the lack of trading volume and market volatility, which argues against the potential 30%-40% nose dive.
Altcoins on alert
As expected, altcoins are following the performance of their “big brother” as XRP has a 4% price drop despite the recent success of Ripple in court. Memecoins such as Shiba Inu and Dogecoin are also rapidly losing their value as hopes of a market recovery were completely dismissed.
We mentioned earlier on U.Today that the performance of meme currencies was zeroed out as SHIB and DOGE returned to values seen before the 30% price increase that took place on August 14th.
