News recap: reasons behind bitcoin’s fall

Crypto market in numbers

Between 14th and 17th August, the cryptocurrency market capitalisation remained steady, according to CoinMarketCap. On 17th August, the index dropped sharply by 8.5% to $1.04 trillion. From 23rd August, the capitalisation recovered slightly from the significant drop and stabilised around $1.06 trillion.

Trading activity notably surged. Between 14th and 18th August, average daily volumes increased by 273%, moving from $19 billion to $71 billion. However, from 19th to 21st August, the indicator fell to values around $21-$23 billion. In the following days, average daily volumes were within the range of $30-$38 billion.

The cryptocurrency fear and greed index dipped into the “Fear” zone. Since 14th August, the indicator had stood above 50 points, but on the 17th, it dropped sharply by 26% to 37 points. Such values were last observed in early March 2023. From 22nd August, the index recovered slightly and settled at 41 points.

Cryptocurrency volatility surged abruptly but remained at low levels. From 14th to 24th August, the 30-day BTC volatility index increased by 132%, from 0.65% to 1.51%. A similar indicator for ETH grew by 130%, from 0.52% to 1.2%.

Cryptocurrency prices finally experienced movement after a month-long period of stagnation. Meanwhile, volatility remained low. Sharp price movements are currently absent, providing an excellent opportunity for short-term traders.

Abnormal selling volumes are not currently being observed. The drop occurred due to panic among short-term holders, driven by FUD from SpaceX – 88.3% of BTC held by such holders is at a loss. The fall was also triggered by hawkish rhetoric from the Federal Reserve. The regulator has allowed for further tightening of monetary policies. Despite this, whales have begun to slowly return to accumulating assets. While this is not yet a global trend, major players won’t be able to ignore such a discount in case of further decline.

Most traded coins (03rd – 23rd August)

Top crypto market driving factors

Overall crypto market

▼ 14.08.2023 – The SEC will not approve a spot bitcoin ETF for a variety of reasons, as concluded by former SEC lawyer, John Reed Stark.

▲ 14.08.2023 – PayPal will launch a cryptocurrency hub for selected users, a service to store digital assets and interact with them on the platform’s account.

▲ 14.08.2023 – A spot bitcoin ETF will help initiate a new crypto cycle, according to a report by Bernstein.

▲ 15.08.2023 – Kevin Kelly, co-founder of Delphi Digital, observed signs of an early bull rally in the current digital asset market.

▼ 15.08.2023 – According to an FDIC review, cryptocurrency-related activity may present new complex risks to the US banking system that are difficult to assess.

▼ 17.08.2023 – The publication of the Federal Reserve’s protocol triggered cryptocurrency sales. The regulator has allowed for the possibility of further tightening of monetary policies.

▼ 17.08.2023 – Tether halted the issuance of USDT on the Kusama, Bitcoin Cash, and Omni Layer networks due to security threats.

▼ 21.08.2023 – An insider at the SEC stated that the approval of spot bitcoin ETFs in 2023 is unlikely.

Bitcoin (BTC)

▲ 14.08.2023 – Long-term holders have accumulated 75% of the total bitcoin supply in their hands.

▼ 14.08.2023 – In Q2, mining service provider, Bitdeer, increased its revenue by 5%, but incurred a net loss of $40.4 million.

▲ 15.08.2023 – Jacobi Asset Management launched the first ETF based on bitcoin in Europe.

▼ 15.08.2023 – According to The Block, the 30-day average annual volatility of bitcoin dropped to 15.5%, the lowest value ever.

▼ 15.08.2023 – Glassnode stated that bitcoin has reached a stage of extreme apathy and exhaustion, with volatility metrics at record lows.

▼ 17.08.2023 – A CoinMarketCap analyst considers the recent increase in government bond yields as a factor in bitcoin sell-offs. Strengthening bond prices indicates decreased liquidity in the broader market.

▼ 17.08.2023 – Chinese developer, Evergrande, filed for bankruptcy.

▼ 17.08.2023 – Marcus Tilenn, Head of Research at Matrixport, noted that the risk of Chinese yuan devaluation played a significant role in bitcoin’s decline.

▼ 17.08.2023 – SpaceX sold bitcoins acquired between 2021 and 2022 for $373 million.

▲ 19.08.2023 – On the night of 19th August, a solo miner successfully mined block #803,821 on the first cryptocurrency network, earning a reward of 6.31 BTC, including fees.

▼ 22.08.2023 – The largest bitcoin drop since the beginning of the year (7.2%) increased the share of “losing” coins held by short-term investors to 88.3%.

▲ 22.08.2023 – The RSI indicator indicated peak oversold conditions for bitcoin since 2020.

▲ 22.08.2023 – The number of bitcoins that haven’t been moved for at least ten years surpassed the milestone of 2.9 million coins for the first time.

▲ 23.08.2023 – Following a recalculation of bitcoin’s mining difficulty, it increased by 6.17%, setting a new historical high at 55.6 T.

Ethereum (ETH)

▼ 15.08.2023 – A significant ethereum holder sold 22,341 ETH.

▲ 17.08.2023 – Valkyrie Funds applied to the SEC for the launch of the Valkyrie Ethereum Strategy ETF.

▲ 19.08.2023 – Ethereum plans to launch a new testnet named Holesky in September.

▼ 21.08.2023 – Vitalik Buterin transferred $1 million in ethereum to an exchange.

▲ 23.08.2023 – According to Santiment, short positions in ETH reached a yearly high, which historically signals a bullish trend.

Ripple (XRP)

▼ 18.08.2023 – Judge Analisa Torres granted the SEC’s request for an interim appeal in the case against Ripple.

▲ 18.08.2023 – Mastercard launched a partnership program to study CBDC innovations, involving blockchain industry firms, including Ripple.

▲ 21.08.2023 – Santiment data revealed that wallets with balances ranging from 10 million to 1 billion XRP resumed accumulating XRP.

Cardano (ADA)

▲ 22.08.2023 – Santiment notes that the Cardano network regained the top spot in terms of developers’ activity.

Dogecoin (DOGE)

▲ 23.08.2023 – Elon Musk tweeted about DOGE again, causing the token’s price to increase by 4% at the moment.

Solana (SOL)

▲ 22.08.2023 – The Solana network has been operational without disruptions or significant issues for six consecutive months, despite prior criticism for frequent outages.

Shiba Inu (SHIB)

▼ 17.08.2023 – The daily rate of SHIB’s decline reached 9%. The market’s response was influenced by issues with the second-tier Shibarium solution after its launch.

▲ 22.08.2023 – Developers announced that Shibrarium will soon be relaunched.

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