As we have mentioned numerous times in our recent crypto market reviews, the positivity on the market we saw in the last few weeks was nothing but a correction within the prolonged downtrend the market entered back in December, and Bitcoin's price performance confirms this hypothesis.
Bitcoin is breaking important support
The rising wedge on Bitcoin is a common pattern that acts as a "cool-off" pattern ahead of the large volatility spike. Sometimes, assets break out upward and enter long-term rallies, leaving the downtrend behind.
With Bitcoin, the first cryptocurrency has been deliberately testing the upper border of the consolidation range. But because of the lack of inflows to the market and the anemic trading volume, short-term rallies did not accelerate further and faded relatively quickly.
With at least two support levels broken, BTC is now looking for other ground to stand on. Unfortunately, the only significant support level we are seeing on the chart right now is the previous local bottom, at the $19,000 price level.
Since the market was mostly surprised by such a strong spike in Bitcoin's volatility, the liquidation volume has reached the local high of around $650 million in the last 24 hours.
Macro pressure on Bitcoin and crypto
One of the main fundamental reasons behind the recent plunge of BTC is the U.S. dollar rally reflected in the DXY index, which measures the performance of USD against a bracket of foreign currencies.
After reaching the 50-day moving average, the U.S. dollar successfully bounced off the support level and is now moving toward the local high of 108.7. The continuation of the U.S. dollar rally would mean a further increase of the pressure on risk assets, including cryptocurrencies and tech stocks.
Despite decreasing inflation, the market is still pricing the upcoming cycles of rate hikes, which is not going to end until the end of this year or the beginning of the next one. Financial experts are forecasting a 75 bps hike at the upcoming FOMC meeting.
Altcoins are bleeding
In addition to the catastrophic performance of the biggest cryptocurrency on the market, alternative digital assets have faced a series of technical issues that fueled the most recent rally.
As we have covered previously, Cardano's reversal on the market was fueled by technical problems that appeared on the testnest with the new version of the node installed. The bug might harm the Vasil hard fork implementation, which is the last thing the network needs.
🧵 (1/n) It's important to point out today that the #Cardano #Testnet is **catastrophically** broken due to a bug in Cardano Node v 1.35.2. This was the version that we had previously been told was "Tested and Ready" for the Vasil Hardfork. This bug was only discovered...— Adam Dean (@adamKDean) August 18, 2022
Ethereum was also targeted by bears and lost more than 7.3% of its value against USD in the last 24 hours, which is the market average at this point.
The majority of altcoins have reached their local support levels, which means we might see a mild bounce on the weekend because of low trading volume on the crypto market and the inactivity of large institutional investors.
At press time, Bitcoin is changing hands at $21,505, Ethereum is consolidating at a 50-day EMA at $1,700 and ADA is moving at $0.46.