PrimeXBT: Was Bitcoin’s rejection of $70,000 and Black Monday’s market shake out a coincidence?
Why Trust Cryptonews
By Matthew Hayward, Senior Market Analyst at PrimeXBT
The liquidity shakeout on Black Monday may seem like a distant memory, but its impact remains relevant as market participants eagerly anticipate upcoming data releases to gauge the Federal Reserve’s (FED) next move. Early Black Monday morning a few weeks back, during the Asia trading session, we saw the Volatility Index (VIX) spike to levels of around 65%. The last time we had visited such areas was during the COVID-19 pandemic back in 2020.
THE VOLATILITY INDEX (VIX):
The spike in the VIX was quickly followed by a surge in Bitcoin’s (BTC) volatility. Early that week, BTC briefly surged to $70,000.00, marking the first time it had reached this level since earlier in the year. However, this rally was short-lived as the price rejected this key psychological level, and subsequently fell to around $65,500.00, a decline of nearly 6.5% from the $70,000.00 high.
Later in the week, decisions on interest rates from the Federal Reserve (FED), the Bank of England (BoE), and the Bank of Japan (BoJ), combined with a disappointing Non-Farm Payroll (NFP) report, accelerated the situation. Traders looked to offload their Carry Trade positions, and recession speculation saw a combined global market sell off, resulting in Black Monday. This combination of factors drove BTC’s price down further to as low as $49,500.00 before it finally found support.
Black Monday, a dramatic market sell-off, indeed left a lasting impression on investors and policymakers. However, the Federal Reserve (FED) chose not to intervene directly during the sell-off, sparking debates about its role in stabilising the economy and financial markets. So the question is, is the FED going to cut interest rates, and if so, by how much? New data releases indicate that the NFP figures were even more overstated than initially thought. It is said that the U.S. Payrolls were overstated by around 818,000 jobs annually, thus roughly 68,000 jobs monthly.
This new data release has sent rate cut expectations by market participants within 2024 soaring.
In hindsight, was Black Monday’s global market selloff an overreaction?
As new data continues to be released each week, particularly concerning key monetary policy indicators like jobless claims and unemployment claims, it appears that the recent market selloff may have been somewhat of an overreaction. The U.S. economy may not be as weak as initially feared. However, the revisions to the Non-Farm Payroll (NFP) data suggest that other influential factors could be at play, and maybe the U.S. economy is not as strong as the data suggests. It’s also worth noting that these significant economic announcements are happening during a U.S. election year, adding another layer of complexity to the situation.
From a technical perspective, Bitcoin (BTC) found solid support in the $49,500.00 to $53,500.00 range following the market selloff, subsequently rallying to as high as $62,500.00. This is nearly a 30% gain from its recent lows during the Black Monday market selloff, a great opportunity for traders if you bought the “dip”. Currently, BTC is trading at just over $60,000.00, as market participants await further “fundamental” news that could provide the confidence needed to drive the price toward new all-time highs.
How are the altcoins hanging on?
Similar to Bitcoin (BTC), when the market experiences a surge in volatility, as it did on Black Monday, altcoins typically follow suit, especially if BTC is significantly impacted. Ethereum (ETH) was no exception. Shortly after the launch of the Ethereum (ETH) Exchange Traded Fund (ETF) by various issuers, ETH also faced a sharp decline in price as investors looked to offload their holidays across the board. The price plummeted to as low as $2,100.00 before finding support in the $2,200.00 to $2,500.00 range.
After ETH dipped to lows of $2,100.00, trading volume surged, driving the price up to an intraday high of $2,800.00, a remarkable rally of over 30% for those fortunate enough to buy at the bottom. Currently, ETH is holding steady, trading at just over $2,600.00.
How can you capitalise on the upcoming economic events?
As the economic landscape evolves, uncertainty naturally arises, and with uncertainty comes opportunity. PrimeXBT, a leading online broker, provides an exclusive all-in-one trading platform designed to meet the diverse needs of traders.
What does this mean for you? At PrimeXBT, you can capitalise on price movements across various markets, including Crypto Futures and CFDs on cryptocurrencies, foreign exchange, indices, and commodities. It also offers the possibility to buy and trade with Crypto as well as fiat. With industry-lowest fees, powerful trading tools, and a broad selection of asset classes, PrimeXBT delivers the features you need to make the most of these economic opportunities.
Trade economic events with PrimeXBT
Disclaimer: The content provided here is for informational purposes only and is not intended as personal investment advice. Past performance is not a reliable indicator of future results. The financial products offered by the Company are complex and come with a high risk of losing money rapidly due to leverage. Virtual assets are inherently volatile and subject to significant value fluctuations, which could result in substantial gains or losses. These products may not be suitable for all investors. Before engaging, you should consider whether you understand how these leveraged products work and whether you can afford the high risk of losing your money. PrimeXBT does not accept clients from Restricted Jurisdictions as indicated in its website.
