The overall market worth of all cryptocurrencies fell to the $1 trillion level, and traders’ unfavorable opinion is reflected in the weak stablecoin demand and the largely missing financing rate.
The total crypto market capitalization soon fell to $1 trillion when the rising wedge formation was shattered on August 17, making the bulls’ hope of recovering the $1.2 trillion support, last seen on June 10, much more improbable.
Not just the crypto, not even Bitcoin markets are seeing worsening conditions. On August 22, WTI oil lost 3.6% of its value, down 28% from its top of $122 on June 8. The 5-year yield on U.S. Treasuries reversed its trend and is currently trading at 3.16% after hitting a low of 2.61% on August 1. All of these indicate that investors are losing faith in the central bank’s practices of asking for more money to hold such debt instruments.
Bitcoin To Face Yet Another Drop In Prices:
According to David Kostin, chief U.S. equity strategist at Goldman Sachs, the risk-reward ratio of the S&P 500 is currently biassed to the negative as a result of a 17% increase since mid-June. Kostin stated in a client letter that the U.S. Federal Reserve would need to tighten the economy more firmly if inflation rose over the target, which would have a detrimental effect on values.
Meanwhile, prolonged lockdowns purportedly designed to stop the spread of COVID-19 in China and issues with property debt prompted the PBOC to lower its five-year lending prime rate to 4.30% from 4.45% on August 21. Curiously, the movement took just one week after the Chinese central bank unexpectedly reduced interest rates.
Investors expected more interest rate increases due to the risk-off mindset brought on by rising inflation, which will eventually cause investors’ enthusiasm for growth stocks, commodities, and cryptocurrencies to decline. As a result, traders are inclined to seek safety in the U.S. dollar and inflation-protected bonds during times of ambiguity.