The cryptocurrency market will face increased volatility as the VIX index has reached its highest level since the "COVID-19 panic". This was stated to The Block by Bohan Jiang, head of the over-the-counter options trading department at Abra.
The expert noted the vulnerability of investors, who in recent weeks have not shown a demand for protection from falling in derivatives.
The market was positioned in the "upper" calls due to the expected speech of US presidential candidate Donald Trump and the launch of the ETH-ETF, he added.
"Participants actively sold volatility after both events. As a result, the spot retreated into its previous range despite the fact that various circumstances had already led to the rise of the VIX last week. I expect IV to remain at a high level until the macroeconomic situation calms down," Jiang commented.
Bob Walden, head of Abra's trading department, agreed with his colleague that the cryptocurrency market was slow to react to emerging events.
"As the macroeconomic situation changed, investors were still inclined to grow, practically not hedging the risks of a fall," he said.
Walden noted that the financing rates for perpetual futures for bitcoin and Ethereum have turned negative over the past 24 hours, making the sharpest downward reversal this year.
Low liquidity and margin calls
Bitfinex analysts recalled that the market turmoil was caused by a noticeable strengthening of the Japanese yen and a series of unfavorable macroeconomic data, which increased the likelihood of a more decisive easing of the Fed's monetary policy to prevent a recession.
"Short-term support [for bitcoin] will form around $48,900. If there is no bullish momentum, this area can be retested, and the macroeconomic situation at this time will determine the further actions of the price," the experts commented.
https://forklog.com/news/eksperty-bitkoin-ne-vinovat-v-obvaleRuslan Lienha, head of the Markets department at YouHodler, believes that the downturn was exacerbated by low liquidity during weekend trading.
"During this period, institutions are usually inactive, and the transfer of fiat funds is difficult. As a result, investors faced a wave of margin requirements for long positions. After such a significant drop, we can see a corrective rebound in bitcoin. However, this growth is likely to be limited due to the prevailing pessimism in the broader markets," the expert warned.
Blofin analysts called the probability of a complete reversal of the financial cycle in the United States low due to the curtailment of the carry trade with the yen. They noted that the fundamental data on employment and the economy do not confirm the impending recession.
4. Fortunately, the likelihood of carry trade unwind triggering a complete turnaround in the US financial cycle is low, as the fundamental employment and economic data do not support an impending recession. However, the end of the carry trade still affects investor sentiment, and… pic.twitter.com/jGMaiT9XdW
— BloFin Academy (@BloFin_Academy) August 5, 2024"However, the cessation of asset trading still affects investor sentiment, and bearish expectations in the short and medium term are spreading across many markets. If the interest rate gap between the Fed and the Bank of Japan narrows rapidly, asset prices are likely to fall even further," the experts explained.
By 25 or 50 basis points?
According to the futures market, the probability of a rate cut by 50 bps immediately reached 78.5% (the remaining 21.5% is the option of 25 bps). For comparison, a month ago the indicator was only 5.5%.
Data: CME Fedwatch.In the Polymarket prediction market, there is a bet on the Fed holding an emergency meeting in order to ease policy. At the peak of the panic, the probability of such an outcome reached 58% before dropping to the current 18%.
Data: Polymarket.Recall that 10x Research called the economic indicators of the United States the main factor in the fall of bitcoin.
Earlier, ForkLog discussed with experts the reasons for the dump and found out the conditions under which highly capitalized coins will begin to recover the price. Read the details in the article.
https://forklog.com/exclusive/razvorot-frs-kogda-ego-zhdat-i-kak-ponizhenie-stavki-otrazitsya-na-kriptovalyutah