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Croxroad

28 Aug 2024 — 4 min read

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⭕ Bitcoin Extends August Gains

On August 23, Bitcoin (BTC) prices and the broader crypto market experienced a notable surge, marking a continuation of the recovery trend that began in early August. The rally was largely fueled by dovish comments from Federal Reserve Chairman Jerome Powell at the Jackson Hole symposium, which heightened expectations for a potential interest rate cut in September. This shift in sentiment led to a substantial increase in risk appetite among investors. According to the latest edition of “Bitfinex Alpha,” Bitcoin saw a 6.06% gain on August 23, making it the second-highest daily move since May 20 and underscoring the market's renewed optimism.

Despite this resurgence, Bitcoin's performance has lagged behind equities since the August 5 capitulation low. While the S&P 500 (SPX) reclaimed its early August highs and monthly open levels by August 15, Bitcoin only reached the $65,000 mark by the end of the week. This discrepancy in performance is notable, especially as the crypto market saw the second-largest daily short liquidations in BTC perpetual futures on August 23, with $40 million wiped out from the market. Total liquidations across all trading pairs exceeded $140 million, reflecting heightened volatility and investor caution.

Furthermore, the open interest in Bitcoin pairs across exchanges, which peaked at over $39 billion on March 29, has since dropped significantly to $26.65 billion by August 5. This decline suggests a reduction in trading activity or a decrease in market leverage. Additionally, funding rates for Bitcoin have turned increasingly negative between $60,000 to $65,000, contrasting sharply with the historically high rates seen in March. In the altcoin markets, average funding rates across large-cap cryptocurrencies have also decreased, with rates currently at 8.1% compared to the 60-70% APR levels observed earlier in the year.

🐻 Altcoin Sherpa Turns Bullish on Bitcoin

Altcoin Sherpa, a prominent crypto trader with over 220,000 followers on social media, has recently shifted his stance to a bullish outlook on Bitcoin (BTC), despite a bearish market structure on the daily chart. Sherpa attributes his optimism to improving macroeconomic conditions and a reduction in sell-pressure. He is particularly hopeful that Bitcoin will surpass its recent high of $70,000 and establish a higher low, signalling a potential short-term rally. This shift in sentiment comes amid expectations of upcoming rate cuts by the Federal Reserve, which could further boost market confidence.

The Federal Reserve's potential rate cuts, as hinted by Chairman Jerome Powell at the Jackson Hole symposium, have led to significant speculation among investors. According to the CME’s FedWatch tool, there is a 61.5% chance of a 25 basis point cut and a 38.5% chance of a 50 basis point reduction in the September Federal Open Market Committee meeting. Additionally, the German government has completed its sale of Bitcoin holdings, and the defunct Mt. Gox exchange faces a deadline in October to repay creditors with approximately 142,000 BTC, which could influence market dynamics.

Sherpa also notes that Bitcoin’s resistance around $71,000 has weakened after multiple tests, suggesting that the level may soon be breached. He anticipates that Bitcoin is setting up for another surge, as evidenced by the formation of a bull flag pattern on the one-hour chart. This pattern typically indicates that the asset is consolidating before a potential breakout, reinforcing Sherpa’s bullish short-term forecast for Bitcoin.

♻️ Regulation

Gold benefits from a highly regulated trading system, with established protocols for weighing, tracking, and safeguarding its authenticity. Regulatory measures often require permission for transporting gold across borders, and investments are typically made through registered dealers and brokers. Secure storage is essential when buying physical gold.

Bitcoin, while also difficult to steal or counterfeit due to its encrypted and decentralised nature, lacks comprehensive regulatory infrastructure in many countries. Its pseudonymous aspect complicates regulatory efforts, and its legality varies by jurisdiction. Unlike gold, Bitcoin's regulatory framework is still developing, which can impact user safety and market stability.

🤣 Crox Road Memes

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