Traders and analysts will remember the beginning of August for a long time. The collapse of multiple assets, the sudden reaction of investors worldwide, and other factors heavily impacted the crypto market. How did Bitcoin and Ethereum react?
Quick reminder: What happened in the first days of August?
Some traders may need to realize why there has been so much red color on their accounts. Spectacular falls caused by multiple factors (especially in the United States and Japan) cause major breakdowns that have spread across markets.
We’ve written about it here if you want to briefly remind yourself.
Nevertheless, the significant fall of major indices impacted the rise of the VIX. The Volatility Index, often referred to as the “fear gauge,” reacts opposite to the performance of NASDAQ, S&P 500, and other American indexes. As a result, VIX reached one of the highest levels in history, skyrocketing from 15 points on August 1 to 37 at some point on August 5.
A week later, the market situation tried to stabilize, as can be seen in the VIX rate, which had already fallen to above 19 points on August 12.
Crypto’s reaction
The factors impacting the crypto market may slightly differ from those impacting traditional assets. Traders point out technological advancements and the implementation of cryptocurrencies into reality, to mention just a few aspects influencing their price.
Even so, the sudden disruption in other markets showed that there is a solid connection between cryptocurrencies and other financial instruments, such as American indices.
At some point, Bitcoin fell below 50,000 U.S. dollars on August 5. It has been the lowest value since the strong rally of BTC during the first months of the year.
What happened last week? Bitcoin strongly recovered, reaching the level of 62,000 U.S. dollars on Thursday. However, the weekend brought another fall, which, luckily for Bitcoin owners, was not so sensational. On August 13, Bitcoin stood at rates above 58,000 U.S. dollars.
Even though Ethereum recovered from the fatal Monday on August 5, it has yet to see as significant growth as Bitcoin. According to analysts, the main issue can be falling below the previous resistance level, standing at 2,875 U.S. dollars. At the beginning of August, ETH was a bit below 3,400 to sensationally plunge even to 2,125 USD last Monday. A week later, it stands above 2,500 USD. The movements are less volatile than last week, which shows that the crypto market seems to have stabilized after the previous earthquake.
Potential outcomes
We’ve already mentioned that the crypto market is heavily tied to other financial instruments, such as indices and forex currency pairs. It means that traders investing in Bitcoin, Ethereum or other altcoins should also stay updated on the events impacting other assets.
The current presidential campaign in the United States, reports brought by the FED, the tense situation in the Middle East, and the ongoing Russian invasion in Ukraine can all impact the crypto market.
