The total crypto market capitalisation soon fell to $1 trillion when the rising wedge formation was shattered on August 17, making the bulls’ hope of recovering the $1.2 trillion support, last seen on June 10, much more improbable, as reported by Cointelegraph.
Not just the crypto markets are seeing worsening conditions. On August 22, WTI oil lost 3.6% of its value, down 28% from its top of $122 on June 8. The 5-year yield on US Treasuries reversed its trend and is currently trading at 3.16% after hitting a low of 2.61% on August 1. All of these indicate that investors are losing faith in the central bank’s practises of asking for more money to hold such debt instruments.
According to David Kostin, chief U.S. equities strategist at Goldman Sachs, the S&P 500’s risk-reward ratio is currently skewed to the downside following a 17% surge since mid-June. Kostin wrote a client note that if inflation surprises to the upside, the U.S. Federal Reserve would have to tighten the economy more forcefully, which would have a negative effect on values, Cointelegraph noted.
Meanwhile, prolonged lockdowns purportedly designed to stop the spread of COVID-19 in China and issues with property debt prompted the PBOC to lower its five-year lending prime rate to 4.30% from 4.45% on August 21. Curiously, the movement took just one week after the Chinese central bank unexpectedly reduced interest rates.
Investors expected more interest rate increases as a result of the risk-off mindset brought on by rising inflation, which will eventually cause investors’ enthusiasm for growth stocks, commodities, and cryptocurrencies to decline. As a result, during times of ambiguity, traders are inclined to seek safety in the US dollar and inflation-protected bonds, as per Cointelegraph.
On August 21, the Fear and Greed Index registered a 27/100, the lowest value in the previous 30 days for this data-driven emotion metre. The activity demonstrated that investors’ opinion had changed from a neutral 44/100 reading on August 16 and that traders are now more wary of the short-term price movements in the cryptocurrency market.
The winners and losers from the previous seven days are listed below as the overall market capitalisation of cryptocurrencies fell by 12.6% to $1.04 trillion. While Bitcoin (BTC) experienced a 12% decrease, a few altcoins with mid-capitalisation experienced drops of 23% or more.
EOS increased 34.4% as its community expressed optimism about the upcoming “Mandel” hard fork in September. The relationship with Block.one is anticipated to end totally as a result of the update. After Socios.com bought $100 million for a 25% share in the new digital and entertainment division of the Barcelona Football Club, Chiliz (CHZ) saw a 2.6% increase.