Originally published on: August 06, 2024
A recent indicator tracking investor sentiment in the Bitcoin market has signaled a potential bear phase due to the macroeconomic impact of rising Japanese interest rates and a stronger yen. Julio Moreno, head of research at CryptoQuant, highlighted that this indicator has not shown a bear signal since January 2023, shortly after the collapse of FTX.
Past instances, such as the COVID-19 panic in March 2020 and the Chinese government’s mining ban in May 2021, demonstrate the indicator’s accuracy in predicting market downturns. However, CryptoQuant founder Ki Young Ju advised monitoring the signal for at least two weeks to confirm its validity. If no changes occur after this period, it could signify a sustained bear market phase.
Despite the current market challenges, Ju remains optimistic about Bitcoin’s future, suggesting it could reach a new all-time high within a year if it maintains a price level above $45,000. The recent interest rate hike by the Bank of Japan, ending years of cheap interest rates, triggered the downturn as investors rushed to liquidate their assets.
While over $1 billion was liquidated from the crypto markets initially, including significant amounts in Bitcoin and Ether, markets have shown signs of recovery. However, the debate continues among traders and analysts about whether this downturn is temporary or will persist. Long-term crypto trader Jelle warned investors about the traditionally tough nature of the Bitcoin market in the third quarter, especially in August and September.
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