As a seasoned crypto investor with a decade of market experience under my belt, I’ve witnessed countless market fluctuations – from the dizzying heights to the crushing depths. The recent Bitcoin price crash is yet another reminder that the crypto market can be as unpredictable as a rollercoaster ride at an amusement park.
The significant drop in Bitcoin‘s value lately might be linked to deteriorating economic situations worldwide. More specifically, the Bank of Japan increasing interest rates on July 31st and a disappointing job market update on August 2nd seem to have initiated the current downward trend in cryptocurrencies.
Read more: Crypto Market Crash: Liquidations Cross $800 Million As Japan’s Nikkei Drops 13%
Recent Bitcoin Price Crash and Macroeconomic Connection
On July 31st, the Bank of Japan (BOJ) increased interest rates by a quarter of a percent, which had an unfavorable effect on carry trades. This move triggered a significant drop of about 3.50% in the USD/JPY exchange rate, causing it to plummet from its peak of 153.906 down to 148.513 on the same day.
As a seasoned investor with years of experience under my belt, I have found that carry trading has been a profitable strategy for me. By borrowing Japanese Yen at low-interest rates and investing in assets with relatively higher interest rates, such as US dollars or other high-yielding securities, I’ve been able to earn the difference between the two interest rates. This technique allows me to generate consistent returns over time, making it an essential part of my investment portfolio. It’s not without risk, but with careful planning and a thorough understanding of market dynamics, carry trading can be a lucrative way to grow your wealth.
As a seasoned trader with over two decades of experience in the financial markets, I have seen my fair share of unexpected market shifts and their impact on profits. The recent decisions by the Bank of Japan (BOJ) to raise interest rates and the US Federal Reserve’s move to cut them have left me, and many other traders, reeling. These moves have forced us to liquidate our positions, leading to a devastating blow to our profits.
This steep market correction has pushed the Sahm Indicator and Joshi Rule to signal “recession.”
Here is What Crypto Investors Can Expect Next
From July 29th through August 5th, a Bitcoin price drop erased approximately 30% of its market value, lowering it from $1,382 trillion to $969 billion. As I’m typing this, the current Bitcoin trading price stands at $52,726.
In simpler terms, technically speaking, Bitcoin (BTC) seems to be at a good point for a rebound. However, if broader economic conditions don’t improve, it’s doubtful that the downward trend in crypto will slow or reverse. If Bitcoin surpasses $50,000, there’s a high probability it could fall back towards its key weekly support level of around $45,156.
If Bitcoin’s price aims to bounce back, it first needs to surpass the significant barrier at $57,265. Beyond that, predictions suggest BTC will encounter the $60,000 psychological threshold. Conquering these obstacles as support would demonstrate strength and potentially entice cautious investors on the sidelines. Nevertheless, given current global market circumstances, potential buyers should exercise utmost caution when purchasing any dips.
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2024-08-05 12:50