Today, there is also a collapse in the price of Bitcoin and Ethereum.
Yesterday, the Fear&Greed index had plummeted to 34, which is in the zone of high fear, and today it has dropped to 26. This index actually measures the sentiment of the previous day, so today’s drop to 26 does not take into account the further price drop of today.
In other words, in the crypto markets there is real and proper panic.
Although on July 12 a lower level (25) had been reached, it is likely that the level that will be measured tomorrow regarding today’s day may be even lower.
We remind you that this index is neutral at 50, while at 100 it indicates maximum enthusiasm and at 0 maximum fear.
In November 2022, after the collapse of the crypto exchange FTX, it reached 20 points.
Summary
Overview of the price of Bitcoin and Ethereum today
Friday, August 2nd, the price of Bitcoin was still at an absolutely calm level, namely $63,000.
Already in the evening, however, it had fallen below $62,000, and between Saturday and Sunday, with the traditional exchanges closed for the weekend, it had then fallen below $60,000.
The real problems occurred right after the return below 60,000$.
Yesterday afternoon the price of BTC had rapidly fallen below $58,000, then during the night two real and proper fast crashes occurred.
The first one took it in less than an hour from $58,000 to about $53,000, and the second one took it in just over half an hour from $53,000 down to below $50,000.
In other news, last night it lost almost 17% after having already lost 9% on Saturday and yesterday.
The cumulative loss from the 63,000$ on Friday was 22%.
The decline of the price of Ethereum
The trend of the price of Ethereum in recent days has been very similar to that of Bitcoin.
However, if we analyze the trend of the ETH price compared to BTC, that is the value ratio between the two, we discover that Ethereum is losing more than Bitcoin.
Friday, before the start of the actual crash, the price of Ethereum expressed in Bitcoin was about 0.048 BTC.
Until yesterday afternoon this balance of power had been maintained, but the collapse of last night had more negative consequences on ETH. In fact, its price in Bitcoin first fell to 0.046 BTC and then even collapsed below 0.042 BTC. Currently, it has slightly risen to 0.043 BTC.
In reality, it is a bit all the altcoins that are suffering more than Bitcoin, so much so that its dominance last night rose to 58%, although it subsequently slightly fell to 57.4%.
These are by far the highest levels of all of 2024, even higher than those of March when BTC recorded its all-time high.
In other words, Bitcoin is in strong suffering, but the altcoins are even more so.
To tell the truth, Ethereum is the one losing the most in the last 24 hours among the top 10 (-24%), with XRP being the one losing the least (-6%).
The causes of the collapse of the price of Bitcoin and Ethereum today
The causes of this collapse do not seem to be due to a significant increase in selling pressure.
In fact, it does not appear that BTC deposits on exchanges are increasing to be sold. On the contrary, the number of BTC present on exchanges is still at a three-year low.
The real problem is the collapse of buying pressure.
However, in these phases of such sudden collapse, forced liquidations of leveraged positions also play a key role.
Open positions with high leverage can be easily liquidated in case of wide and sudden price movements.
Yesterday, with the drop in the price of Bitcoin below $60,000, strong forced liquidations of leveraged long positions probably occurred. This necessarily implies forced sales of BTC, and given that there were many open positions with leverage, the result was massive sales triggered automatically for purely technical reasons.
The collapse below $60,000, and probably also the subsequent ones below $58,000 and $53,000, could have been caused by sales due to the fear that the military and geopolitical situation in the Middle East might deteriorate.
The rest was done by forced liquidations.
The forecasts
At this moment it is very difficult to imagine how the situation might evolve in the short term.
It is unlikely, however, that the ongoing difficulties that are negatively impacting will dissipate soon.
It is necessary to remember that almost all the forecasts from authoritative sources considered the start of a new bullrun possible only in autumn, and that prices in spring had risen very much indeed.
At the beginning of the year, after the launch of spot Bitcoin ETFs in the USA, there was an excess of enthusiasm that ended up inflating a mini-bubble, which has now burst, and there is an excess of fear.
That there was an excess of fear was already clear on Saturday, August 3, when the Fear&Greed index measured a level of 37 relative to the previous day. The price of Bitcoin had only dropped to $60,000, a level already reached many times during 2024.
Now it will be necessary to at least wait for the excess fear to dissipate, and given that the surge of enthusiasm lasted more than five months, it seems really difficult for a significant and lasting rebound to occur in the short term.
Furthermore, much will depend on the general situation, not only of the financial markets but also at the geopolitical level. The turning point could be the presidential elections in the USA at the beginning of November.
