After a relatively tranquil summer, the cryptocurrency world experienced a rude awakening on the night of August 18th when the price of Bitcoin plummeted by over 9%, reaching $24,713, paired with Tether (USDT) on the Binance Exchange. This abrupt downturn triggered a massive liquidation of margin positions on crypto exchanges, while the fear and greed index of the cryptocurrency market slid from "neutral" (50-54 points) to "fear" (37 points at the time of publication).
This sudden price collapse caught many small market players off guard and was driven more by emotional reactions than negative fundamentals, according to experts. Victor Pershikov, a cryptocurrency market analyst, emphasized that large market operators did not alter their positions, and miners did not increase their selling volumes. This suggests that the crash was largely due to an impulsive reaction from retail investors.
Vladimir Cherpnikov, the CEO of Exmo.me, commented that it appears that the Bitcoin price has finally started to move after months of stagnation. However, volatility remains relatively low, with a 30-day volatility index (VCO) of only 1.52%. This could present an opportunity for short-term traders, but sharp movements have not yet begun.
One concern for the cryptocurrency market is the increasing correlation between cryptocurrencies and the US stock market. Cherpnikov believes this may pose a risk, along with the potential decline in US stock prices. Historically, August and September are weak months for Bitcoin, with the leading cryptocurrency often closing in the red during these months.
In the event of a confirmed negative scenario, Cherpnikov predicts that the Bitcoin price could drop to around $22,000. However, there are positive aspects to consider. Long-term traders are holding their positions, and in the case of further price drops below $25,000, there may be an accumulation of assets. Technical indicators already suggest an oversold zone, which could pave the way for a Bitcoin price rebound to $30,000.
While Bitcoin has been hit, other cryptocurrencies have suffered even more significant losses. Some, such as Algorand (ALGO), have already reached lows not seen since 2022. Nevertheless, experts believe that the market has become more interesting, and the approaching end of the summer holidays could lead to a natural increase in trading volumes and more significant price swings, creating excellent conditions for speculators.
Victor Pershikov maintains his positive forecasts for the third and fourth quarters, expecting further growth in market capitalization and a return of the Bitcoin price to $40,000. However, a lack of new liquidity, especially from bonds, remains an obstacle.
In conclusion, the cryptocurrency market remains highly volatile and influenced by various factors. Investors should be prepared for further changes in the coming months, with October and November potentially bringing a more favorable market situation. The key will be surpassing the $1.2 trillion market capitalization threshold to open the door to broader recovery, with Bitcoin and Ethereum possibly leading the way. Nonetheless, caution remains paramount in this highly speculative market.