Why is the Crypto Market Down Today? Time to Buy the Dip?

Why is the Crypto Market Down Today? Time to Buy the Dip?

The first week of August 2024 got off to a miserable start for risk asset investors across the globe.

Major equity markets in the U.S., Europe, Japan, Australia, South Korea, and India were battered on August 5, 2024.

Bitcoin (BTC) mirrored equity market losses to fall below the $50,000 mark for the first time in nearly five months.

Meanwhile, Ethereum (ETH) bore the brunt of the selloff as the premier altcoin fell as much as 21% on the day.

Why is crypto crashing today? As we try and answer that, we will also look forward and analyze whether Bitcoin crashing is an opportunity to buy the dip.

Why is the Crypto Market Down?

The recent crash in cryptocurrency prices can be mainly attributed to macroeconomic factors:

U.S. Fed’s Rate Hike Cycle

Let’s rewind to March 2022, when the U.S. Federal Reserve (Fed) hiked interest rates for the first time in two years to quell inflation in the country. The March 2022 hike marked the start of a global monetary tightening cycle that saw central banks across the world raise borrowing rates to keep up with the Fed.

The Fed was very aggressive in its fight against inflation, raising interest rates from 0.25% in March 2022 to 5.5% by July 2023.

The last time the Fed undertook such a strong measure — raising rates from 1% in June 2004 to 5.25% in June 2006 — it was preceded by the Great Recession of 2007-2008.

Investors now fear that history could repeat itself, having seen unemployment rates in the U.S. rise consistently over the past year. A contraction of U.S. factory activity for four straight months between April 2024 to July 2024 has also reinforced recession fears.

“Historically, the likelihood of a recession in 2025 is high, and the stock market typically anticipates such downturns well in advance,” said  Markus Theilen of 10x Research in a note.

The crypto crash today may also make sense when we understand that the institutionalization of cryptocurrencies has made the digital asset market more sensitive to macroeconomic forces than ever before.

Financial institutions, hedge funds and professional investors are selling Bitcoin and altcoins as they prepare for a potential recession.

Anndy Lian, intergovernmental blockchain expert and author of ‘Blockchain Revolution 2030’ told Techopedia:

“Global recession fears can significantly impact cryptocurrency prices, primarily due to investors’ heightened risk aversion. When economic indicators suggest a potential downturn, investors often shift their capital from riskier assets like cryptocurrencies to safer investments such as government bonds or gold.

“This flight to safety can lead to a sell-off in the crypto market, driving prices down.”

Unwinding of Japanese Yen Carry Trade

Many also attributed the fall in the risk asset market that occurred in early August 2024 to the unwinding of the Japanese Yen carry trade.

The Japanese central bank has historically maintained zero-to-negative interest rates in order to boost economic activity and counter deflation in the island nation.

However, in March 2024, the Bank of Japan (BoJ) ended the era of negative interest rates for the first time in 17 years by increasing short-term interest rates to 0-0.1%.

On July 31, 2024, the BoJ raised rates further to 0.25%, making it more expensive to borrow the Japanese yen.

The Yen had been a favourite among investors as a carry trade option, where investors borrow money at a lower interest rate to invest the borrowed sum in assets that can provide higher returns.

“The BoJ’s rate hike last week (on July 31, 2024), which played a key role in the subsequent market meltdown, showed that you can’t unwind the biggest carry trade of the century without breaking a few heads,” said Presto Research in an email newsletter.

Should I Buy the Dip?

With BTC trading over 26% below its all-time high price ($73,750 in March 2024) and ETH trading at six-month lows, investors may be thinking of buying the crypto dip.

We asked Techopedia’s panel of crypto experts for their thoughts on the subject.

Shiven Moodley, chief operating officer and macro strategist at brokerage firm 80eight Group, said:

“As a trader, I am buying the dip. Support levels of around $42,000 and $38,000 (for BTC) support accumulation in my thesis that the price will move back above $75,000 towards the end of the year.

“There is positive long-term anticipation for price action ahead of the election in the U.S.”

Meanwhile, Sergei Chmel, managing partner of alternative investment firm SeQuant Capital quoted legendary investor Warren Buffet and said:

“Be brave when others are fearful, and be fearful while others are brave.

He added: “DCA [dollar cost averaging] is the best strategy for a long-term horizon. Trading is a path to poverty.”

Interestingly, Buffett’s company, Berkshire Hathaway, seems to have followed his advice by selling 390 million Apple shares in the second quarter of 2024, just before Apple shares hit an all-time high in mid-July 2024. Berkshire Hathaway held a cash stake of over $276 billion as of June 30, 2024

Elsewhere, 10x Research warned that long-term investment strategies like HODLing and DCA in BTC and ETH have not been favorable since 2021.

“Bitcoin is primarily a momentum trading game where the trend is your friend—until it isn’t. While we can outline potential cycle developments, trading the peaks and troughs requires reacting to breakdown or breakout signals.

“This approach might result in losses when false buy signals occur during rallies, but effective risk management, such as using stop-loss orders, can protect most traders’ capital.”

BTC Hedge Criticism

Crypto’s crash alongside global equity markets in early August 2024 invited criticism from a section of the crowd who questioned the popular crypto narrative that Bitcoin is a hedge against global economies and a good asset for diversification.

Joe Weisenthal, editor at Bloomberg, said Bitcoin – often dubbed “digital gold” – was looking “a lot more like Nvidia than it does gold.”

Elsewhere, Beat Nussbaumer, founder of MacroBeat, wrote:

“BTC dropped some 10% to 52.3K….that much for a store of value…. at some point, people will finally see it for what it is… just another risky asset.”

Michael Nadeau of the DeFi Report newsletter explained crypto’s correlated crash with the global equity market, saying:

While crypto is generally uncorrelated to traditional markets, correlations quickly move to 1 during macro/liquidity events. All assets are correlated during these times, with crypto being much more volatile (why you never play with leverage).”

Outlook for Crypto Market

Macroeconomics will continue to be a key driver of risk asset markets over the near term as the U.S. Fed prepares to embark on a rate cut cycle that is expected to start in September 2024.

While rate cuts are typically seen as bullish events for risk asset markets, the underlying conditions — slow hiring, rising unemployment, and contracting manufacturing activity — have compelled investors to take a cautious stance.

“As noted earlier this week, if the Federal Reserve cuts rates after a prolonged hiking cycle solely due to weaker inflation, stocks (and Bitcoin) should interpret the first cut as bullish.

“However, if a weak economy drives the cut — as was the case in 2001 and 2007 — stocks (and Bitcoin) are likely to decline,” said 10x Research.

Looking forward, we asked Techopedia’s expert panels for their outlook on the crypto market.

Moodley said:

“BTC has some consolidation support levels of around $42k and $ 38k, which would interest many whales. While ETH has breached a two-standard deviation move, any more volatility could see us break the $2000 key support level toward $1800”

Sergei said:

“Regarding Bitcoin and its role as a hedge, one thing every investor should understand and remember about Bitcoin is that it is a perfect hedge in a medium-and-long term time horizon, but because it’s one of the most liquid assets in the world, in moments of panic investors rush to sell what they can.”

The Bottom Line

As this article goes to press, the crypto market has bounced back from the Monday market crash. Investors are buying the dip as we speak with BTC rising over 10% and ETH jumping over 14% on August 6, 2024 in early Asia trade.

If you are thinking of investing in risk asset markets, remember to always do your own due diligence before investing. Market analysts and experts can be wrong, and the future cannot be predicted. This article should not be taken as financial advice and is for informational purposes only.

 

Source: https://www.techopedia.com/news/why-is-crypto-market-down-today-time-to-buy-the-dip

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Top 10 PEPE Holders: Who Owns the Most PEPE Coins Today?

Top 10 PEPE Holders: Who Owns the Most PEPE Coins Today?

Meme coins are on a bullish run this week, with some of the biggest names on the market, including Dogecoin (DOGE), Shiba Inu (SHIB), and PEPE, seeing massive gains. Although this price rally may not be directly linked to the meme coin frenzy itself, crypto analysts are speculating it is linked to the performance of Bitcoin (BTC), the world’s most popular digital asset.

At the start of February 2024, BTC started to rise and has since gained over 55% of its value, according to data provided by CoinMarketCap. The hike is speculated to have been aided by the recent approval of Bitcoin ETFs as well as the upcoming halving.

PEPE, the third biggest meme coin by market capitalization, saw its price surge by 254% in the past week  —up from $0.000002100 levels to currently sitting at around $0.000007480 as of March 5, 2024, according to CoinMarketCap.

According to data published on Twitter by Lookonchain, the surge in PEPE’s price could have been driven by whale accumulation, as two whales bought $4.9 million worth of PEPE tokens earlier today. But who has the most PEPE to capitalize on the rally?

Let’s look at the largest PEPE holders and where the cryptocurrency could be headed in the future.

Key Takeaways

  • Memecoins, including DOGE, SHIB, and PEPE, have experienced significant gains, potentially driven by the recent surge in BTC’s price and favorable market conditions.
  • PEPE has seen a remarkable 254% price surge in the past week, which could be partly attributed to whale accumulation.
  • Recent whale activity showed five wallets, assumed to be controlled by the same entity, selling 970 billion PEPE coins, making substantial profits since purchasing the digital assets.
  • The top 10 PEPE owners collectively hold over 45% of the total token supply, a significant portion indicating potential influence over price movements.
  • Celebrities like Elon Musk have historically influenced meme coin ownership through endorsements and online activity.

Who Owns the Most PEPE? Top 10 PEPE Holders

PEPE holders were exceptionally active on March 5, 2024, according to data provided by Lookonchain.

Anndy Lian, the author of NFT: From Zero to Hero, speculated that PEPE’s recent price jump might have been driven by a combination of factors, including a surge in demand and popularity of meme coins and the viral marketing and social media campaigns put out by the PEPE team and community.

Lookonchain found that five wallets, that are assumed to be the same person, sold 970 billion PEPE tokens, making around $5.66 million in profit since purchasing the tokens on January 15, 2024, for $1.18 million at the time.

 

According to the provided data, which was collected through Etherscan, these are the five wallet addresses:

  • 0x570cFE86ec71Cdae2D104a5A8F316d20de3C26F1
  • 0xFB37D526991EBeb92EE0C9B6D7EbD4a5C9c24f02
  • 0xd0dcf500901D9296a1F3489955857B0367103AF1
  • 0x43d9325467e3EdA336C7fa34cbA0991E9A38fAAF
  • 0x5c77655D1C768d6f6386Bc4CD85aeCB9F8f714b2

Additionally, another PEPE holder with the following wallet address 0x522e48ce64d357743935d932f4854b31e0928472 deposited 200 billion tokens (amounting to $1.48 million) to Binance for profit, according to data on Etherscan, holding onto an additional 400 billion ($2.91 million) tokens.

But are these the biggest PEPE holders?

The total number of PEPE tokens in circulation as of March 5, 2024, surpasses 420 trillion coins, according to data published on CoinMarketCap.

As of the same date, CoinCarp noted that PEPE was held by 171,107 individual wallets. The top 10 PEPE owners held over 45% of the total token supply, and the top 100 held over 73%, showing that these whales could yield significant influence over where the price of the cryptocurrency could be headed.

Ethercan provided similar data but noted that the total number of PEPE holders stands at around 171,956 individual wallets.

# Address name Quantity  %
1 0xf977814e90da44bfa03b6295a0616a897441acec
Binance8 
86,937,371,231,577 20.67
2 0x6cc5f688a315f3dc28a7781717a9a798a59fda7b
OKX
23,359,359,502,097 5.55
3 0x5a52e96bacdabb82fd05763e25335261b270efcb
Binance28
19,793,289,492,570 4.7
4 0xf89d7b9c864f589bbf53a82105107622b35eaa40
Bybit: Hot Wallet
15,497,168,347,419 3.68
5 0x16b2b042f15564bb8585259f535907f375bdc415
Kraken33
9,592,676,526,587 2.28
6 0xf3b0073e3a7f747c7a38b36b805247b222c302a3
Crypto.com6
9,090,087,727,861 2.16
7 0x28c6c06298d514db089934071355e5743bf21d60
Binance14
8,767,537,942,522 2.08
8 0x835678a611b28684005a5e2233695fb6cbbb0007 7,242,850,000,000 1.72
9 0x000000000000000000000000000000000000dead 6,917,069,267,049 1.64
10 0xd6216fc19db775df9774a6e33526131da7d19a2c
KyCoin6
5,635,658,884,120 1.34

 

According to the data provided above, the top 10 PEPE owners hold trillions of tokens, meaning that the whales conducting most major token movements earlier today are much lower on the list. The wallet holding 400 billion PEPE tokens is the 83rd biggest PEPE billionaire, according to CoinCarp.

Lian noted that whales may have different investment strategies, especially when it comes to PEPE, because the top 10 holders own a big amount of the total supply. This makes it harder for investors to predict their actions, which may not “necessarily be coordinated”.

Musk’s Impact on the PEPE Market

Celebrities have been a long-time known factor for wielding influence in memecoin ownership, with some of the most prominent names online, like Elon Musk and Mark Cuban promoting DOGE, for example.

According to the official PEPE coin website:

“$PEPE is a meme coin with no intrinsic value or expectation of financial return. There is no formal team or roadmap. the coin is completely useless and for entertainment purposes only.”

And because of this, recent price hikes and PEPE millionaire investments could be associated with people wanting to jump in on a trend and FOMO.

Lian said:

“The increasing popularity and demand for meme coins, especially after the success of Shiba Inu and Dogecoin, created a FOMO (fear of missing out) effect among investors and traders who wanted to catch the next big wave.”

A recent tweet reply by Elon Musk, stating that the entrepreneur will soon start posting memes again could have further triggered the positive movement amid top holders of PEPE.

 

Although Musk has never spoken about owning PEPE directly, his online activity has previously proven to have influenced the token’s price. On May 13, 2023, the entrepreneur posted a tweet featuring the token’s mascot, Pepe the Frog, which led the token to surge by nearly 50% in just 24 hours.

Investing in PEPE Is Simply “Fun”

Lian explained that you can never know for certain why whale accounts are buying into a certain cryptocurrency or not.

“Whales may be buying into the coin for various reasons, such as speculation, diversification, or support. Some whales may be buying PEPE as a speculative investment, hoping to profit from its price fluctuations or future growth. Others may be buying PEPE as a way of diversifying their portfolio, adding some exposure to the meme coin sector.”

On a more personal note, Lian saw the investment as a way of supporting the project and meme culture and showing appreciation for a project and its community.

“After so many years in the space, if a crypto investor would value ‘intrinsic value’ higher, I would ask him to go and buy more ‘stonks’. To me, it is fun or entertainment, enjoying the thrill or humor of investing in a meme coin that makes a bull market more exciting. Of course, none of this is financial advice.”

The Bottom Line

The recent bullish momentum in PEPE’s price reflects a good period for crypto markets. While whale movements and the concentration of PEPE coins among the 100 top holders could raise some questions about market dynamics and potential influence on price movements, the light-hearted nature of the memecoin tends to draw investors in.

 

Source: https://www.techopedia.com/who-owns-the-most-pepe

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j

Today in Crypto: Bitget Q3 Report Finds BGB Trading Volume Exceeded $1.3 Billion, US Doctor Pleaded Guilty to Hiring Hitman With BTC, Beluga Raises $4 Million

Today in Crypto: Bitget Q3 Report Finds BGB Trading Volume Exceeded $1.3 Billion, US Doctor Pleaded Guilty to Hiring Hitman With BTC, Beluga Raises $4 Million

Exchange news

  • Bitget released a financial report highlighting the platform’s achievements for Q3 2023, stating that, despite the spot trading and derivative trading volume on centralized exchanges (CEXs) declining by 22% and 23%, respectively, Bitget achieved one of the highest increases in market share of 9.43%. It further reported that the BGB token reached the top 5 CEX tokens by market cap, with a 300% year-to-date price growth; the number of BGB holders overpassed 350,000 in Q3; the trading volume for BGB exceeded $1.3 billion; the exchange unveiled its expansion plans into the Middle East region, and it launched the $100 million fund to support the Web3 ecosystem.

Crime news

  • A Georgia, USA, doctor pleaded guilty to using the dark web to hire a hitman to kill his girlfriend, paying over $16,000 in bitcoin (BTC) for the job. According to the US Attorney’s Office, the order included the victim’s name, address, Facebook account, license plate, and car description, with James Wan (54) stating: “Can take wallet phone and car. Shoot and go. Or take car.” In April 2022, Wan transferred a 50% downpayment of approximately $8,000 in BTC to the dark web marketplace, but that payment was lost, so he followed it up with another one. The administrator confirmed the new address was correct and that the BTC had arrived in the escrow account. A week later, he sent another $8,000 worth of BTC to ensure his escrow account contained the total required to complete the order, followed by $1,200 in May after the BTC price had dropped. FBI agents learned about the order, notified the victim, and provided her protection, the press release said.

Investment news

  • Crypto platform Beluga announced a $4 million seed round from crypto and FinTech investors. The round was led by Fin Capital with participation from AnagramUDHCDispersion CapitalAptos Labs2 Punks CapitalBorderless CapitalKyber Capital186 VenturesW11 CapitalRubik Ventures, and more. Angel investors included Charlie Lee, Founder of Litecoin; Mike Lempres, Former Chief Risk and Legal Officer of Coinbase; Brandon Gath, Head of Kraken Ventures; Akash Garg, Former CTO of MoonPay; Salil Pitroda, Former Blockchain.com Board Observer; Howard Lindzon, Co-Founder of Stocktwits; and Jim Robinson, Co-Founder of RRE VenturesAccording to the press release, in the coming months, Beluga plans to launch more tools to help onboard new users and help them find and use the best crypto products.

Regulation news

  • The use of cryptocurrency by Hamas to fund its strike on Israel is likely to raise red flags in Asian countries that are framing regulations to govern the digital currency, the South China Morning Post reported, citing analysts. “It is a kick on the backside for most governments. All regulatory bodies will take a closer look at crypto regulation. Governments will need to start implementing new rules and regulations,” said Raj Kapoor, founder of India Blockchain Alliance. Some countries may even “bring up the narrative that banning cryptocurrencies is the way forward,” argued Anndy Lian, Singapore-based author of the book NFT: From Zero to Hero. He added that banning crypto would just drive terrorist financing underground and make it harder to trace and stop. “Cryptocurrencies can be traced and tracked, while fiat (currency) such as US dollars cannot.” Terrorist financing underscores the need for harmonizing standards across jurisdictions, analysts opined.

AI news

  • ELONN.AI (ENHANCED_LANGUAGE_ORIENTED_NEURAL_NETWORK), backed by SMART VALOR, a Switzerland-based technology company and the only digital asset exchange listed on Nasdaq in Europe, today announced the first stage of its product roadmap and the app launch. Per an announcement, “in a bold pursuit to disrupt the supremacy of Big Tech in the realm of AI, the founders’ vision is to craft an AI companion, elevating every investment experience with heightened intelligence, safety, and effortless simplicity.” Olga Feldmeier, the Chief Evengelizer of ELONN.AI, said that “we believe that the future of AI is decentralized, open-source and does not belong in walled gardens.” As an initiator, SMART VALOR, has funded the initial development of ELONN.AI for the amount of $14 million, with part of the funding stemming from the company’s initial public offering (IPO) on Nasdaq First North last year, it said.

Blockchain news

  • Q Development AG, the company supporting the decentralized Q Protocol, which works to strengthen the governance of blockchain-based projects, announced the beginning of stage two of its Saving & Borrowing Incentive Program. Per the press release, the initiative is designed to encourage the use of Q’s Saving and Borrowing platform, which enables users to borrow QUSD stablecoins against collateral such as WBTCDAI, and USDC. Users receive Q tokens for asset bridging when assets are transferred from Ethereum to Q; locking collateral assets into a Q vault; and parking QUSD stablecoins within Q’s Saving Portal. The initiative comprises three phases, each lasting three weeks, with subsequent phases only commencing should a pre-set total value locked (TVL) goal be met. The current phase requires users to lock a total of $500,000 by October 29, it said.

 

 

Source: https://cryptonews.com/news/today-in-crypto-bitget-q3-report-finds-bgb-trading-volume-exceeded-13-billion-us-doctor-pleaded-guilty-to-hiring-hitman-with-btc-beluga-raises-4-million.htm

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j