Right now, the crypto market isn’t looking too hot. While U.S. equities are flying high, hitting record levels, and Asian stocks are mostly in the green, crypto is in a different place altogether.
Everyone’s giddy about a possible rate cut and a soft landing for America’s economy, but crypto traders aren’t feeling it. Over the weekend, Bitcoin’s perpetual funding rates dropped to -13%, which is the lowest they’ve been since 2022.
Nervousness lingers
Despite the upbeat vibe in the traditional markets, there’s still a lot of jitteriness in the air. The options market, which is always a good indicator of investor sentiment, is showing signs of stress.
It’s currently pricing in a 1% swing on the S&P 500 for Powell’s Jackson Hole speech coming up this Friday. This is a pretty big deal because it shows that, even in this sea of optimism, there’s still a fair amount of anxiety about what could come next.
Meanwhile, in the world of crypto, the bearish sentiment stands out like a sore thumb. The market just can’t seem to shake off the gloom.
One factor that might be contributing to this is the potential unwinding of the USD/JPY carry trade. Companies like Vanguard are ramping up their bets on more interest rate hikes from the Bank of Japan.
If this plays out, it could ripple through the markets, including crypto, and we could be in for another leg down.
Market struggles below key levels
The technical picture isn’t painting a rosier scenario either. If you look at the chart below, you’ll see that Bitcoin’s price has been stuck below the 200-day moving average, which is around the $63K mark.
Since that rejection, Bitcoin’s price hasn’t managed to hold above the $60,000 level. Instead, it’s now inching closer to the $57,000 support level. If this support doesn’t hold, we could be looking at a sharp drop towards the $52,000 area.
As long as Bitcoin stays below that 200-day moving average, don’t expect any kind of sustained rally. The bulls are losing steam, and it’s showing.
The 4-hour chart gives a clearer snapshot of just how shaky things are. After rebounding from the $50,000 zone, Bitcoin’s price has been ping-ponging between $60,000 and $57,000.
What’s more, the bullish momentum that had been driving the price higher seems to be fading fast. The Relative Strength Index (RSI) has dipped below the 50% mark again, which is another red flag.
If the $57,000 support zone crumbles, a drop towards the $52,000 level seems more and more likely.
