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Why is the crypto market down today?

The worst week for the cryptocurrency market since November 2022 is coming to an end as its capitalization attempts to stay above $1 trillion.

Price trends across the cryptocurrency market remained in a downtrend on Aug. 19 as the total market capitalization tries to stay above $1 trillion. 

Bitcoin 

price has also been as the markets moved into the weekend. 

Bitcoin leads crypto market losses

The major down-move this week occurred on Aug. 17 following Elon Musk’s SpaceX its Bitcoin stash as well as several other major reasons.

Bitcoin, which controls nearly 50% of the total cryptocurrency market, reacted negatively to the SpaceX news as the selloff worsened amid a across the crypto derivatives market.

As of Aug. 18, around 176,300 traders had liquidated $1.04 billion worth of contracts,

with long exits making almost 80% of it. In other words, a long squeeze forced traders to sell at a loss to avoid even bigger losses.

Macro risks pressure crypto lower

The decline across the crypto market mirrored losses in the global stock market.

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Notably, the MSCI World Index, which includes large and mid-cap stocks from twenty-three

developed countries, dropped sharply on Aug. 17, as shown in the chart below. This coincided with mounting worriesabout .

The economic slump i that their central bank will weaken the yuan to boost its economy

— something that could negatively impact the crypto market, particularly in the short term. 

The last time China devalued the yuan in August 2015, BTC price dropped by 23% in the following two weeks, while the crypto market lost 27% in the same period. 

“Head-and-shoulders” hints at more pain

Meanwhile, the crypto market’s technicals aren’t painting a rosy picture either. The current decline is forming a potentiaon the weekly chart, raising anticipations about more losses in 2023.

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H&S is a bearish reversal indicator that typically resolves after the price breaks

below its support line (or neckline). As of Aug. 18, the crypto market tested the H&S neckline for a potential breakdown move.

If the pattern is plays out, its downside target for 2023’s end or early 2024 will be around $751 billion, down over 25% from the current valuation.

On the other hand, the bulls will attempt a recovery toward the 50-week exponential moving average (50-week EMA; the red wave) near $1.113 trillion in 2023.

Holding the important 200-week EMA (the blue wave) level near $1.08 trillion as support will be crucial for the bulls moving forward. 

السابق
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