Global financial markets have faced widespread declines this week as demand for risky assets, including cryptocurrencies and stocks, begins to wane.
On Tuesday, Bitcoin fell below the historic $100,000 level, with the S&P 500 index and gold down 3% and 10% from their all-time highs, respectively. On Wednesday, Bitcoin fell to an intraday low of $99,110 before recovering slightly, down 21% from its October peak, according to data from CoinGecko.
The total market capitalization of cryptocurrencies fell to $3.44 trillion, the lowest level in four months. It also caused a decline 2 billion dollars It was the second day in a row that a significant easing of leverage occurred due to liquidations across digital assets.
Regardless of the key factors driving the decline or how good the network’s fundamentals look, the key question for investors is how much further down can prices fall from here?
Ryan Yun, senior research analyst at Tiger Research, expects Bitcoin to hold at $98,000 and maintains his long-term price target of $200,000.
Tim Sun, senior research fellow at Hashkey Group, said the economic downturn reflected fundamental changes in market dynamics, particularly risk aversion. decryption.
“Bonds were the only asset class to post significant gains, while most risk assets, including Bitcoin, gold and equities, were broadly down,” he said. “Even if downside pressure continues, the $85,000 level remains a strong support area for Bitcoin.”
“The stronger US dollar may be one of the main drivers of the market-wide price decline,” said Jiehan Chen, principal analyst of operations onboarding at Schroders. decryption.
Other experts agreed that a strong dollar is a key pressure point for dollar-denominated risk assets.
Sun also pointed to worrying signs in the short-term funding market, including widening spreads, increased use of the Fed’s standing repurchase facility, and the virtual drying up of liquidity from the system alongside more than $1 trillion in U.S. Treasuries.
As the US government shutdown continues, likely to extend into December, the tightening liquidity environment is amplifying fear and uncertainty.
Owned by Prediction Market Myriad decryption Parent company Dastan, users placed There is a 98.7% chance that the ongoing government shutdown will be the largest in U.S. history.
While the government shutdown is causing fear, Derek Lim, head of research at Caladan, said: decryption Tight liquidity appears to be exacerbating the ongoing decline.
On-chain data
Although sentiment has sharply turned negative, on-chain data reveals a more nuanced picture.
According to verified CryptoQuant analyst XWIN Research, “Bitcoin’s recent sub-$100,000 decline is primarily driven by sentiment,” with the Fear & Greed Index plummeting to 21.
of post Major network fundamentals remain strong, with hashrate nearing all-time highs, highlighting that $10.7 billion of stablecoins have flowed into Binance, potentially acting as dry powder for future purchases.
Even though Bitcoin has fallen below $100,000, “social data shows there is still a lot of confident bullish buying,” on-chain analytics platform Santiment noted in a Wednesday news release. Tweetreflects the views of XWIN Research.
