Bitcoin is unlikely to escape its southern price trajectory this year. Currently trading at $21,454.37, the largest cryptocurrency has already lost 51.82% of its value so far in 2022. Naturally, long-term investors (aka HODLers) are seriously shaken.
It is natural that BTC is leaving cryptocurrency exchanges in large numbers. This trend began shortly after the Terra-Luna crash and various bankruptcy announcements by cryptocurrency companies such as 3AC, Chelsea, Voyager, etc. Major exchanges experienced massive outflows worth 1,19,000 BTC in June 2022.
July was no different, with approximately 96,000 BTC sold, according to Arcane Research. As of August 25, 65,000 BTC has been withdrawn from all major cryptocurrency exchanges.
That may be true for retail investors, but financial titans are doubling down on Bitcoin. BTC trading activity doubled in June 2022, according to Singapore DBS Bank's high-net-worth members-only digital exchange.
Despite market concerns that the US Federal Reserve's interest rate hikes will slow and rise slightly, August looks set to end on a gloomy note. According to cryptocurrency insight chain Glassnode, BTC balances on cryptocurrency exchanges are already at just 2,324,897.117, the lowest in four years.
However, Vikram Subburaj, CEO of Giottus Crypto Platform, asks investors to remain calm but prepare for another downturn.
According to a study by on-chain analyst Glass node, “Bitcoin (BTC) short-term holders have outpaced long-term holders for the first time in two years. “This means that new investors are thinking that the current price is a good place to invest, but it could also be interpreted that traders are buying to cash in on a short-term uptrend for quick profits.”
“We believe that BTC is currently in a long-term accumulation zone and will benefit all investors who can invest and HODL for 3-5 years. That said, the global macroeconomic environment continues to be unstable, so another significant decline in BTC (>20%) is possible before the end of the year. Daily or weekly cost averaging remains a good approach for the coming months,” he continued.
Asia Connection
A recent post from the IMF suggested that Bitcoin appears to have a special affinity for Asian stock markets. According to the Chainalytic 2021 Global Crypto Adoption Index, the top three most accepting countries for cryptocurrencies are Asia (Vietnam, India, and Pakistan).
The volatility correlation between BTC and Indian stock indices has tripled from 0.03 between 2017 and 2019 to 0.44 over the past two years. A high correlation means there is a strong correlation between two variables. So, if something has a negative impact on the global stock market, it will drag the cryptocurrency market along with it.
global dip
The decline of the cryptocurrency market, especially BTC, is highly correlated with the global market downturn. The current cryptocurrency greed and fear index is 27 points, indicating extreme fear. This indicates that most investors are afraid of an imminent price crash and selling their BTC holdings.
CNN's Fear and Greed Index reflects similar sentiments. For example, stock momentum in the S&P 500, the benchmark index, is slowing, indicating investor fears. The greed for bonds is also excessive.
People typically flock to financially safe havens, especially during times of economic uncertainty.
However, investors and traders are currently waiting with bated breath to hear the speech of Federal Reserve Chairman Jerome Powell, who is the main driving force and direction of global markets and consequently BTC.
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