The latest report from the companyCryptoCompare shows that volatility has returned to very high levels in the crypto markets.
Volatility has returned to the cryptocurrency markets in August as Bitcoin and Ethereum failed to break key resistance levels at $25,000 and $2,000 before a sell-off occurred following Fed Chairman Jerome Powell’s speech in Jackson Hole. This is one of the key findings highlighted in Crypto compare’s new monthly report on cryptocurrency markets.
BitcoinandEthereumclosed the month at $20,050 and $1,554, respectively, down 14.0% and 7.47%. This volatility was reflected in trading volume as spot trading on the centralized exchanges jumped 36.8% to $1.91 trillion.
Thus, the trend remains basically negative wait-and-see in digital asset markets, which are suffering from the difficult economic situation, generated by high inflation and literally skyrocketing energy costs since the outbreak of the conflict in Ukraine.
Against this backdrop, the Fed’s policies, which seem to have become aggressive in bringing inflation under control, with two consecutive 0.75% interest rate hikes and a third one on the way, is only depressing the stock markets and with them the cryptocurrency markets.
Crypto Compare’s report reads: “Spot trading volumes spiked 36.8% in August to $1.91tn – marking August as the second largest month by spot volume so far this year. This rise in spot trading volume, however, led to a 9.59% decline in derivatives market share – with the derivatives market falling to a yearly low of 62.4% market share.”
Analysis of data collected
According to data collected by CryptoCompare, derivatives trading volumes are bucking the trend, rising 11.9% to $3.16 trillion. This is the first increase in three months that brings derivatives to be the driver of the market, after the big drop in previous months.
CryptoCompare experts write: “Historically, the derivatives market has dominated crypto trading volumes. The fall in the derivatives market share reflects the uncertain macroeconomic conditions with rising inflation rates and a looming threat of recession. The price action following the Fed reiterating its stance to control inflation suggests that there was a strong sell-off from investors’ spot holdings.”
During the period, Bitcoin trading in Tether increased 15.4% to 10.1 million BTC in August, realizing the highest volume recorded for the BTC/USDT trading pair since June 2020. USDT’s market share in BTC spot trading in stablecoin or fiat rose to 66.4%, the highest level since September 2020.
Trading in BUSD increased 0.44% to 2.14 million BTC in August, the token saw its volumes rise 394% since the beginning of the year. Meanwhile, USDC and TUSD saw their trading volume decline by 11.4% and 63.0% respectively in August.
The aggregate volume of BTC and ETH futures contracts on the CME fell 20.7% to $28.9 billion in August. This is the lowest volume recorded for the exchange since December 2020.
Finally, there is an interesting figure concerning the highest trading volume for the month, recorded on 15 August: $119 billion, up 67.8% from the infra-month high in July.
Bitcoin price analysis
Bitcoin price started ashort-term upside correctionfrom the $18,223 low. BTC was able to climb above the $18,800 and $19,000 levels. It even cleared the $19,350 resistance zone.
However, the price faced a strong resistance near the $19,650 level and the100 hourly simple moving average. A high was formed near $19,678 and the price started a fresh decline. There was a move below the $19,500 and $19,400 levels.
Bitcoin price traded below the 50% Fib retracement level of the upward move from the $18,223 swing low to $19,678 high. The bulls are now protecting the $18,800 support zone.
The 61.8% Fib retracement level of the upward move from the $18,223 swing low to $19,678 high is acting as a support. On the upside, an immediate resistance is near the $19,200 level. The next major resistance sits near the $19,350 level.
Source: BTCUSD on TradingView.com
There is also a major bearish trend line forming with resistance near $19,420 on the hourly chart of the BTC/USD pair. A clear move above the trend line, the 100 hourly simple moving average, and $19,500 could open the doors for a move towards the $20,000 level. Any more gains might send the price towards the $20,500 resistance zone.
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