The largest cryptocurrency bitcoin (BTCUSD) plummets after the crypto pair failed to hold above the major diagonal trendline. The price of Bitcoin fell by 7.5% in 24 hours and in a flash crash, BTC temporarily fell towards the $25,000 mark. The fall leads to a cascade of liquidations in the cryptocurrency market. The global cryptocurrency market cap was trading sharply lower, falling down to the $1.06 trillion mark as it dropped as much as 7 per cent in the last 24 hours.
From a technical perspective, the overall momentum is bearish after the crypto pair breaks below the key trendline. As of this writing, both Bitcoin and Ethereum slightly recovered from the recent dip after news surfaced about a potential Ethereum Futures ETF approval by the SEC. Looking at the downside, the next immediate support for $BTCUSD is identified as $25,800 and then $25,300 zones. Another point to keep in mind is that any aggressive shorts are to be initiated only below the $25,000 level.
These are a few reasons why Bitcoin crashes to a two-month low:
According to a report by The Wall Street Journal SpaceX, Elon Musk's space company, has sold its entire Bitcoin holdings.
Chinese real estate developer Evergrande declares bankruptcy in the US.
The latest Federal Reserve policy meeting minutes signaled that further interest rate hikes are still on the table.
European stock markets are trading deep in the red following negative cues from Wall Street and Asian markets overnight. Wall Street remains under pressure throughout this week as the strong US economic data and hawkish FED meeting minutes reinforced bets on the possibility of additional rate hikes this year. The ongoing economic challenges and a deepening property sector crisis in China also seriously affect investor confidence.
Crude oil prices gaining momentum back after the strong retracement. The negative risk sentiment surrounding China’s slowing economy was the main reason for the crude oil price's downfall this week. The bearish sentiment was also fueled after the minutes of the Federal Reserve meeting suggested further interest rate hikes due to upside risks to Inflation.
In the currency market, the great British pound fell against all majors following the release of disappointing UK retail sales data. The data showed that Retail sales in the UK fell by 1.2% in July, worse than market forecasts of a 0.5% fall. Meantime, EURUSD remains undecided as to which way its next directional break is, and now the focus shifts to the release of the final reading of the Consumer Price Index for July.
The precious metal slightly recovered from the previous session's lows. During the previous session, the metal plunged to a multi-month low of $1985 following the release of stronger-than-expected US economic data. The strong economic data lowered the expectation that the U.S. Fed will cut down the interest rate this year.
On the data front, US jobless claims fall as the labor market continues to show resiliency. Weekly jobless claims dropped by 11,000 to 239,000 for the week ending August 12, down from 250,000 the previous week, the Labor Department reported Thursday. Philly Fed Manufacturing Index Rebounds In August For Strongest Month Since April 2022. The index jumped back into the expansionary territory to 12, compared to July's reading of -13.5.
Technical Outlook and Review
EURUSD: Technically the current price action signals suggest that a medium-term bearish trend remains intact. On the downside, if it continues the bearish momentum, the slump will quickly extend toward 1.0840/30. On the flip side, the resistance for the pair appears to be around 1.0920. If the price breaks and closes above this area, the next upside level to watch is 1.0950.
The important levels to watch for today: Support- 1.0850 and 1.0830 Resistance- 1.0920 and 1.0950.
GOLD: The metal rebounded after it found short-term buyers below the $1890 area. If the upside momentum continues the next upside levels are to watch $1900 and $1908. On the downside, $1880 remains a key support level to watch for today.
The important levels to watch for today: Support- 1885 and 1880 Resistance- 1900 and 1908.
Quote of the day – You can lose money very fast, in two months, but you very rarely make money very fast in the stock market. When I look back, my great stocks took a long time to work out. -Peter Lynch.