Bitcoin Faces ‘Extreme Fear’ Amid Predictions of Further Price Decline by Arthur Hayes
The cryptocurrency market has recently plunged into a state of “extreme fear” as Bitcoin experienced a temporary decline below the $56,000 mark. Arthur Hayes, the co-founder of BitMEX, has indicated that Bitcoin may drop an additional 12% during the weekend, potentially falling under the $50,000 threshold. This sentiment is reflected in the Crypto Fear & Greed Index, which registered a score of 22 on September 6, classifying the market as being in a state of “extreme fear.” This score is a noticeable seven-point decrease from the previous day, which had positioned the sentiment in the realm of “fear.”
The current score is the lowest observed since the index recorded a 20 on August 8 and marks the first reentry into the “extreme fear” category since August 12, when the index documented a score of 25, as reported by Cointelegraph Markets Pro.
Despite a minor recovery in Bitcoin’s price to approximately $56,533, Mr. Hayes expressed his bearish outlook through a social media post on X (formerly known as Twitter) on September 6, stating, “BTC is heavy. I am gunning for sub $50k this weekend. I took a cheeky short.”
Simultaneously, Bitcoin has encountered challenges in rallying momentum due to persistent concerns regarding the sluggish state of the United States economy. Recent job market data released on September 5 fell below expectations, exacerbating fears regarding a potential interest rate adjustment by the Federal Reserve.
Throughout the day, Bitcoin’s decline adversely impacted other significant cryptocurrencies, resulting in a notable price drop for assets including Ether, which is currently valued at approximately $131, and XRP at about $0.55. The collective downturn in cryptocurrency prices led to an estimated $94.26 million in liquidations within a 24-hour period, primarily affecting investors who had bet on price increases. According to data from CoinGlass, more than $71 million in long positions were liquidated, with nearly $36.71 million associated with Bitcoin longs, accounting for close to 40% of all liquidations, along with approximately $17.36 million in liquidated Ethereum long positions.
In conclusion, as the cryptocurrency market grapples with heightened levels of fear and uncertainty, investors are advised to navigate these volatile conditions with caution. The outlook for Bitcoin remains precarious, as economic factors continue to influence market sentiment.
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