Current crypto market conditions can only be described as extreme. Ongoing corrections saw the price of all major cryptocurrencies tumble to levels not seen in almost two years. Total market cap dropped below $900 billion, down from more than $2 trillion from the peak, during this economic downturn. Selloffs were also seen across traditional financial markets by fears of rampant inflation, imminent interest rate hikes and the prospect of recessions in major economies. The Crypto Fear & Greed Index, which uses a basket of factors to determine overall conditions among traders, plummeted to 7/100. The last time it was this low was in August 2019. That time Bitcoin was struggling to stay above the $10,000 level and this indicator bottomed at 5/100, which was the absolute all-time low ever tracked by this index.
The current drawdown in price is largely driven by changes in the macroeconomic and geopolitical tensions. Increases in interest rates, coupled with quantitative tightening, has driven correlations across assets towards 1 and we are seeing asset price sell-offs across all of the financial markets. Inflation in the United States was reported at 8.6%, the fastest year-over-year growth in over 40 years. Record inflation is registered in Europe also.
Bitcoin has fallen below $20,000, levels not seen since December 2020. The price touched $19,150, down almost 70% from the peak in November last year. On the downfall Bitcoin has tested the long-term ultimate support region, defined by the 200-week moving average. Historically, Bitcoin had not stayed below this key threshold and typically brought sharp reversals soon after the retest. While the past is never a guarantee of future performance, it is essential to account for this 200-week benchmark as the long-term support region, which will play significant role in future once market stabilizes.
The capitulation event seems to have arrived with Crypto fear & Greed sentiment index at 7 points, but the bottoming process will take some time. Amid escalated fears and panic selling, charts are full of large wicks on daily candles, indicating large amount of volatility.
The current drawdown in price is largely driven by changes in the macroeconomic and geopolitical tensions. Increases in interest rates, coupled with quantitative tightening, has driven correlations across assets towards 1 and we are seeing asset price sell-offs across all of the financial markets. Inflation in the United States was reported at 8.6%, the fastest year-over-year growth in over 40 years. Record inflation is registered in Europe also.
Bitcoin has fallen below $20,000, levels not seen since December 2020. The price touched $19,150, down almost 70% from the peak in November last year. On the downfall Bitcoin has tested the long-term ultimate support region, defined by the 200-week moving average. Historically, Bitcoin had not stayed below this key threshold and typically brought sharp reversals soon after the retest. While the past is never a guarantee of future performance, it is essential to account for this 200-week benchmark as the long-term support region, which will play significant role in future once market stabilizes.
The capitulation event seems to have arrived with Crypto fear & Greed sentiment index at 7 points, but the bottoming process will take some time. Amid escalated fears and panic selling, charts are full of large wicks on daily candles, indicating large amount of volatility.