An Opportunity in Disguise?

An Opportunity in Disguise?

Aug 6, 2024
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This Week in Crypto

Yesterday, the cryptoasset market was down by 17%, and Ethereum has had its worst trading day since 2021. Following the turbulent hours of the first trading day of the week, our research team broke down some of the primary factors driving markets; you can have a look here.

This morning, we saw some signs of recovery after yesterday’s sharp market drop. Here’s what happened where we left off on Monday:

  • Japan stocks rallied more than 9% on Tuesday: NIKKEI 225 (+10.23%), TOPIX (+9.30%).
  • Crypto and equities: Matching the sentiment, the total crypto market cap increased by 8.8%. Wall Street’s fear gauge VIX has cooled down to 38.57 from yesterday’s soaring 65.
  • U.S. economic activity expands: Purchasing managers reported a 51.4% expansion (up from 48.8%) in the services sector last month, which spurred some optimism for a soft landing.
  • Futures advance: Nasdaq 100 (+1.5%), STOXX 600 (+0.6%), showing initial signs of recovery after yesterday’s market turbulence.

For more information, read our full market update here.

How did BTC and ETH perform in previous bear markets?

Bitcoin is currently in the Extreme Fear zone, which shows that the asset is undervalued and may be an important  investment opportunity . The last time Bitcoin was in this territory, it was trading around $16K following the FTX crash, followed by a historical price rally, reaching multiple all-time highs.

Figure 1 – Bitcoin Fear & Greed Index

glassnode-studio_btc-fear-greed-index-alternative-me (1)

Source: Glassnode

The two examples below, a macro-specific and crypto-specific event, led to the largest daily drawdowns of Bitcoin and Ethereum. These can be used to understand how their prices may move after yesterday’s events.

Figure 2 – Bitcoin 3 Biggest Daily Drawdowns Since 2020

Screenshot 2024-08-06 at 13.11.21

Source: 21Shares

Figure 3 – Ethereum 3 Biggest Daily Drawdowns Since 2020

Screenshot 2024-08-06 at 13.11.36

Source: 21Shares

Screenshot 2024-08-06 at 13.38.41

Potential Scenarios for BTC / ETH

Below, we outline the macro-specific events that potentially affect Bitcoin and Ethereum’s recovery in the near future.

Screenshot 2024-08-06 at 13.53.46

* Short-term potential price movement

Important to note that past performance is not indicative of future results but can still serve as a useful reference point.

This Week's Calendar

august 6 2024_Calendar

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