Bitcoin (BTC) is facing challenges as it hovers around the $20,000 mark, with repeated dips below this level causing concern among analysts who predict a possible further decline in the short term. Market analyst Philip Swift recently noted a shift in sentiment among investors, with the Crypto Fear and Greed Index dropping to “Extreme Fear.”
The market is not enjoying $BTC hanging around $20k. Back into Extreme Fear today.
Live chart: https://t.co/Jr5151zN7I
On August 29, analytics firm Delphi Digital pointed out that Bitcoin open interest had reached a new all-time high. They stated, “The Futures Open Interest Leverage Ratio for BTC reached its highest level ever recorded at more than 3% of BTC market cap, following the market-wide collapse on August 26th.”
Delphi Digital explained that higher values of the open interest leverage ratio indicate a significant open interest relative to the market size, posing risks such as market squeezes, liquidation cascades, or delivery events.
Uncertainty looms over the market as the downtrend in stocks, reflected in the recent declines of the Dow and S&P 500, may continue to exert downward pressure on the price of Bitcoin. Reports show that major indices closed August with losses, raising concerns among traders and investors.
Meanwhile, Cleveland Federal Reserve President Loretta Mester has indicated a potential rise in the benchmark interest rate to over 4%, ruling out any cuts in 2023. This significant increase from the Fed’s target range could impact various markets, including cryptocurrencies like Bitcoin.
As the correlation between BTC and equities markets remains strong, analysts anticipate a prolonged decline in Bitcoin’s price in the coming months, influenced by macroeconomic factors and market dynamics.
On a more positive note, the upcoming Merge has instilled optimism among traders, particularly in the Ether (ETH) ecosystem. Ether and ETH staking-related tokens have shown resilience, rebounding from recent sell-offs. Following a drop to $1,422 on August 28, Ether has recovered by 11.3% and currently hovers just below $1,600. Notably, Lido (LDO), the largest ETH staking service, has surged by 12% in a day and 32% since the previous week’s decline to $1.55.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk; therefore, conducting thorough research is crucial before making any decisions.
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