After a significant drop below $50,000 due to a massive sell-off on August 5, Bitcoin shows signs of recovery with a rebound above the $56,000 level. Crypto analysts now believe that the Bitcoin sell-off is nearing its end, with BTC’s seller exhaustion peaking.
In a post on X, crypto analyst Rekt Capital stated, “The selling volume has reached and even dramatically surpassed the seller exhaustion levels seen at previous upward price reversals.”
“Indeed, Bitcoin hasn’t experienced this amount of selling volume since the Halving in mid-April 2024,” he wrote.
Rekt Capital also suggested that Bitcoin could rebound to as high as $62,550 in the short term as it now seems to be starting to fill the CME Gap, which is the difference between Bitcoin’s closing price on the Chicago Mercantile Exchange (CME) and its opening price when trading resumes.
With seller exhaustion at its peak, there is a possibility that Bitcoin has found its bottom, and this could be the final correction before the upward trend begins. Veteran crypto analyst Peter Brandt suggested that Bitcoin’s decline since this year’s Halving could indicate that it has now reached a price drop comparable to the one during the bull market cycle from 2015 to 2017.
Market Risks Increase as Japanese Yen Weakens
Market risks in stocks and crypto increase as the Japanese yen loses strength against the US dollar, following the Bank of Japan’s decision to raise interest rates to 0.25%.
In a thread on X on August 5, The Kobeissi Letter blamed the weakening Japanese yen carry trade. This practice involves borrowing money at near-zero interest rates in Japan and then investing it in higher-yielding assets.
Kobeissi also noted that the VIX volatility index has reached the same levels as during the 2008 global financial crisis and the COVID-19 market crash in March 2020.
This statement aligns with what Charles Edwards, Founder of Capriole Investments, revealed, stating that the current market situation shows similarities to early 2020.
“Stocks are overvalued, recession risks are rising, unemployment is increasing, and sharply correlated global markets are moving down. At some point, the Federal Reserve will step in, likely with earlier rate cuts and possibly liquidity. But when? Until then, expect ALL markets to be correlated,” Edwards wrote in a post on X.
On the same day, there were various reports that The Fed is considering holding an emergency meeting to evaluate the current market situation.
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