Summary:
The crypto market retraced by 3% as it prepares for the Eurozone CPI and FOMC minutes.
Bitcoin fell below $60,000, trading at about $58,000.
The Crypto Fear and Greed Index is at 28, indicating fear in the market.
Traders are increasing short positions, with the Bitcoin long/short ratio dropping to 0.89.
Ethereum saw $30 million liquidated in the last 24 hours, mainly from long positions.
The cryptocurrency market experienced a slight retracement on Monday, August 19, with the global crypto market capitalization down by 3% at the time of writing. Both Bitcoin (BTC) and Ethereum (ETH) were trading in the red, as the market braces for the release of key economic indicators.
Current Market Conditions
Bitcoin struggled to maintain the psychological threshold of $60,000, dropping to around $58,000. Similarly, Ethereum followed suit, trading lower at approximately $2,570. The Crypto Fear and Greed Index currently sits at 28, indicating a state of fear in the market.
Economic Indicators to Watch
The release of the Eurozone Consumer Price Index (CPI) and the Federal Open Market Committee (FOMC) minutes this week could significantly influence market sentiment. EuroStat estimates that July inflation will rise to 2.6%, up from 2.5% in June, potentially impacting the European Central Bank's interest rate decisions. The ECB had started trimming rates in June and paused in July.
In the US, the FOMC minutes from the July meeting are expected to clarify the Federal Reserve's dovish stance after keeping rates unchanged last month.
Shift Towards Short Positions
Traders are increasingly betting against Bitcoin, as evidenced by a decline in the long/short ratio in the Bitcoin futures market from 1 to 0.89. This indicates a rise in short positions. Bitcoin funding rates have turned negative, and Open Interest has slightly dropped to $30 billion, showing that long traders are abandoning their positions.
Ethereum is experiencing the highest volume of liquidations across the crypto market, with $30 million worth of ETH liquidated in the last 24 hours, predominantly from long positions. The Ethereum long/short ratio has decreased to 0.85, with 54% of futures traders now holding short positions.
Future Outlook
Despite the bearish trends, analyst Crypto Sunmoon suggests that the increasing activity in the futures market indicates that bulls are still in play. Investors taking risks is typically a sign of a bull market, and the analyst posits that the reckless use of leverage by risk-takers could fuel a future crypto bull market.
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