- Bitcoin price may drop to $45,000 if the $55,000 crucial support fails.
- Investors have begun borrowing the Yen once more in their carry trades.
- The majority of crypto traders are bearish on BTC, as shown by $2.01B in cumulative Short Liquidation Leverage.
Bitcoin price is struggling to sustain above $58,000 despite positive ETF inflows and increasing adoption. After the crypto crash on August 4 and 5 Bitcoin bulls quickly scooped more BTC at discount price, diving the price back above $60,000. The Japanese Yen carry trades are now making a comeback about two weeks after the crash, and the markets are concerned about the possibility of another black Monday.
Bitcoin Price Statistics
- Bitcoin Market Cap Dominance: 53.4% ⬇
- Bitcoin Market Cap: $1.153 trillion ⬇
- Circulating supply: 19.740 million ⬆
- Percentage Mined: 94%
Previous Bitcoin Price Analysis
Last week Bitcoin price rebounded from the lows of the August 5 crash. In our previous publication, we discussed the possibility of a crash taking place on August’s new moon. The crash, which began late Sunday and the whole of Monday, devastated the entire crypto market.
The end of the 35–year–old Bank of Japan’s (BoJ) Yield Curve Control program to sustain the 10-Year Bond interest rates at or close to zero spooked the market and weakened the Yen against the US Dollar.
Bitcoin price has failed to sustain above the $60,000 mark, which is a show of weakness on its part. Will the asset crash once more?
Yen Carry Trades Making A Comeback
Before the end of the BoJ YCC program, carry traders would borrow YEN from the BoJ at 0% interest and purchase yield-generating assets elsewhere, but the trading halted after interest rates spiked, causing JPY to crash against the US Dollar.
Nomura Holdings, Japan’s biggest brokerage firm, disclosed that investors have begun borrowing the Yen once more in their carry trades.
The BoJ has indicated they won’t raise interest rates due to unstable market conditions.
While the BoJ governor Kazuo Ueda is slated to speak before parliament on August 23, the FOMC will give its interest rates report on September 4. If Ueda remains dovish on August 23, and FOMC Chair Jerome Powel comes off hawkish on September 4, the differences may attract investors to enter the carry trade.
Authur Hayes, the co-founder of BitMEX, warns if the BoJ and FED don’t reduce the USD-JPY interest rate differential, the market will focus on high-leverage trades that can make the market volatile and prone to another market crash.
Bitcoin Price May Hit $45k if This Happens
The price of Bitcoin is trending below the 21, 50, and 200 exponential moving averages (EMAs), confirming it is a downtrend. Bitcoin may likely find support at $55,535. However, if this support fails, BTC will see a 22% drop from its current price to the next zone of market imbalance – $45,000.
In the recent market crash, Bitcoin did not fulfill traders’ expectations of closing the FVG, which means the market must drop again.
An analysis of the Bitcoin Liquidation Map shows that most traders are Short. According to Coinglass data, the number of cumulative Short Liquidation Leverage is $2.01 billion, significantly larger than Longs. This imbalance signals bearish sentiment is dominating the market because traders expect further downside potential for Bitcoin.
A deeper analysis of the Liquidation Map shows an increase in volume around the current support level of $58,436.
If Bitcoin bulls push the price and maintain above $62,000, it may signal strength in the market, which may invalidate the current bearish thesis. Bitcoin may rise higher to the next level of resistance around $72,000.
