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Interest Rates are Going Up Recently, the interest rates on long-term treasury bonds have reached their highest levels in 2022. This means that borrowing money will become more expensive in the future. Higher interest rates can have a big impact on the economy and the stock market.
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Bitcoin is Following the Market Down Bitcoin's value has been going down along with the rest of the stock market. This includes other things like the S&P 500, Nasdaq Composite, and gold prices. The downward trend started when the Federal Open Market Committee (FOMC) meeting took place in July. The meeting hinted at possible rate hikes, and at the same time, the consumer price index (CPI) went up, which added more pressure to the market.
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Bitcoin's Sell-Off is Costing Billions Between July and mid-August, Bitcoin's price stayed in a certain range while the U.S. dollar got stronger. But when the FOMC meeting minutes were released in August, there was a big sell-off in the cryptocurrency market. This caused more than $150 million in long positions to be sold, and a total of about $5 billion in open interest to lose value. This event also caused the funds rate to turn negative.
Even though the sell-off paused at $26,000, there is still uncertainty in the market. Funding rates have returned to normal levels, but the overall value of open interest has stayed relatively stable.
- Clearing Order Flow On August 17th, there were a series of events where a lot of bitcoin was sold. This caused the price of bitcoin in the futures market to be different from the price in the regular market. At one point, the price of bitcoin fell below a previous low point. This shows that there were more people selling than buying. It's important to note that the regular market price did not reach that same low point.
Overall, these factors have contributed to the drop in bitcoin's value. It's important to keep an eye on interest rates and market trends to understand what might happen next.