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Bitcoin does not appear to have crossed its southern price path this year. Currently trading at $21,454.37, the value of the largest cryptocurrency has already plummeted 51.82% so far in 2022. Naturally, long-term investors known as HODLers are very worried.
No wonder BTC is leaving cryptocurrency exchanges in droves. This trend started shortly after the collapse of Terra-Luna and various bankruptcy declarations by crypto companies such as 3AC, Celsius, Voyager, and more. Major exchanges saw a huge outflow of 1,19,000 BTC in June 2022.
According to Arcane Research, July was no different, with around 96,000 BTC sold. As of August 25, 65,000 BTC has been withdrawn from all major crypto exchanges.
While this may be the case for retail investors, the financial dignitaries are doubling down on Bitcoin. According to the high-value, member-exclusive digital exchange of Singapore’s DBS Bank, BTC trading activity doubled in June 2022.
Although the market took some heart out of the US Fed’s slowdown due to higher interest rates and looking a little higher, August will seemingly end on a gloomy note. According to crypto insights chain Glassnode, BTC balances on crypto exchanges are already dwindling at just 2,324,897.117, the lowest level in four years.
However, Vikram Suburaj, CEO of the Giottus Crypto platform, is asking investors to stay calm, and prepare for another downfall.
“Short-term Bitcoin (BTC) holders have outperformed long-term Bitcoin (BTC) holders for the first time in two years, according to research by an analyst on the Glass node. While this suggests that new investors are considering profitable current investment prices, the There is also an explanation that traders are buying to take advantage of short-term rallies to make quick profits.”
“We believe that BTC is currently in a long-term area of accumulation and will benefit all investors who can invest and HODL for three to five years. However, the global macroeconomic environment remains volatile, so another significant drop (>20%) in Bitcoin is possible before End of this year Average daily or weekly cost remains a good approach for the next few months.
Asian Connection
A recent publication by the International Monetary Fund noted that Bitcoin appears to have a special connection to the Asian stock market. According to Chainalysis 2021 Global Crypto Adoption Index, the top three countries with crypto acceptance are Asia (Vietnam, India and Pakistan).
The volatility correlation between BTC and Indian stock indices has grown 3-fold, from 0.03 between 2017 and 2019 to 0.44 in the past two years. A higher correlation means that there is a strong relationship between the two variables. Thus, if something negatively affects the global stock market, it will also attract the cryptocurrency markets side by side.
global retreat
The decline in the cryptocurrency markets and especially BTC is closely related to the recession in the global markets. At the moment, the crypto greed and fear index indicates extreme fear, with a score of 27. This represents the fear of most investors of an imminent crash in prices and the panic of selling their Bitcoin holdings.
The CNN Index of Fear and Greed also reflects similar sentiments. For example, stock momentum in the S&P 500, the benchmark index, is slowing, indicating investor fear. There is also extreme greed when it comes to bonds.
Usually, people flock to it as a financial safe haven, especially in times of economic uncertainty.
But for now, investors and traders are eagerly awaiting the speech of Federal Reserve Chairman Jerome Powell, as it is a major driving force and direction for global markets and thus Bitcoin.
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