Bitcoin (BTC) tried to control losses after the opening of Wall Street on August 5 as cryptocurrency markets rebounded from a brutal selloff.
BTC price saw a welcome rebound as it neared $55,000.
According to data from Cointelegraph Markets Pro and TradingView, the price of BTC bounced above $4,000 after the start of the U.S. trading session.
Bitcoin has unnerved traders after falling below $50,000 for the first time since February, with many predicting further price declines as the TradFi market recovers.
Ultimately, risky assets have seen relatively modest declines, with the S&P 500 down 3% and the Nasdaq Composite down 3.7% as of this writing.
So U.S. markets were spared the losses in Asia, where Japan’s Nikkei 225 recorded its worst two-day decline in history.
As Cointelegraph reported, the alleged mass sell-off by trading firm Jump Trading sparked an immediate reaction in the cryptocurrency markets.
Commentary, Trading Data Kobeishi Letter makes it clear that the Japanese yen carry trade is the target of criticism, as it is currently an unprofitable trade and adds to existing market pain.
“The solution to this problem is not as simple as it may seem and may require a separate thread,” he explained in a dedicated X thread.
“This is a very different situation from previous market downturns.”
Kobeishi also noted that the VIX volatility index has reached levels only recorded twice in history: during the 2008 global financial crisis and during the market-wide crash in March 2020 due to COVID-19.
The latter drew a number of comparisons that day, including from Charles Edwards, founder of quantitative Bitcoin and digital asset fund Capriol Investments.
“There are some eerie similarities to early 2020: stocks were overvalued, recession risks were rising, unemployment was rising, global markets were falling sharply,” he told his X followers.
“At some point, the Fed is likely to intervene, possibly with an early rate cut and some liquidity. But when? Until then, I expect all markets to be correlated.”
The Federal Reserve was reported to be considering an emergency meeting that day to review the situation, and expectations for the outcome were quite mixed.
“I would argue for an emergency 75 basis point cut in the federal funds rate, and I would suggest another 75 basis points cut at their September meeting, and that would be the bare minimum,” Jeremy Siegel, a professor at the Wharton School at the University of Pennsylvania, told CNBC.
According to CME Group’s FedWatch tool, Siegel mentioned next month’s Federal Open Market Committee (FOMC) meeting, which the market expects will result in a 0.5% rate cut.
Bitcoin selling volume is similar to the period after the halving
Turning to Bitcoin market activity, popular trader Skew struck a balanced tone, explaining that despite the six-month lows, there was “no real turmoil.”
Related: Was Warren Buffett Right? 5 Things to Know About Bitcoin This Week
“Maintained sell control often precedes a downtrend. Buyers are (consistently) selling, and passive supply (limited sellers on each bounce) occurs,” he explained in part of his recent X coverage.
Skew noted that declines are often the result of prolonged failed breakout activity, in this case above $70,000.
“There’s no real disruption yet,” he concluded of the spot order book setup at the world’s largest exchange, Binance.
Popular trader and analyst Rekt Capital noted “fatigue” among sellers as prices fell to a low of $49,577, down 29% from the local high in July.
“Sell side volume has finally reached and dramatically surpassed the seller exhaustion levels seen in previous price reversals (red box in volume),” he noted on an accompanying chart uploaded to X.
“In fact, Bitcoin hasn’t seen this level of sell-off volume since the halving in mid-April 2024.”
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.