Since mid-February, Santiment data show that Bitcoin addresses with ten or more $BTC have dramatically increased. During the past seven months, the number of shark addresses on the network has increased by 3.6%, reaching its highest level in 19 months.
The volatility in the market claimed the most amount of long liquidations in a week, totaling $45 million on September 13. According to data from Coinglass, the total amount of long liquidations in the cryptocurrency industry was $168 million. In contrast, data from CryptoQuant showed that exchange inflows reached their highest level since July 1.
What of the Merge?
The focus of crypto traders is on Ethereum’s upcoming proof-of-stake, a historic event for the cryptocurrency. They have shifted their focus to Bitcoin due to the negative bias against the cryptocurrency.
According to data from Santiment, the sentiment of traders has shifted toward Bitcoin due to the upcoming events surrounding Ethereum. Despite the recent rise in Bitcoin’s value, most investors still ignore it. The analysts at the company identified this negativity.
Due to the lack of discussions about Bitcoin on social media platforms, the negativity surrounding the cryptocurrency has affected the sentiment of many investors. That is one of the main reasons why the sentiment of many traders has dropped.
Despite the negativity surrounding Bitcoin, Ethereum is still attracting more traders due to the increasing number of discussions about the upcoming blockchain fork and the merge. The combination of these factors has been considered a bullish catalyst for cryptocurrency. Despite the negative sentiment surrounding Bitcoin, the analysts at Santiment believe that the asset will continue to rise.
Crypto Price Faces a Daily Decline of 9%
According to data from TradingView, BTC/USD dropped by around 8% on the day. The decline was triggered by the release of the US consumer price index for August, which came in at 0.2% higher than expected.
The rise in consumer prices pushed the likelihood of a rate hike by the Federal Reserve next week to around 75%. That could put a strain on the already struggling risk-asset markets.
Although Bitcoin was sensitive to the Fed’s decision, the price action avoided significant losses. It managed to bounce back from the significant support at around $20,800. BTC/USD also managed to take out the latest CME futures gap created at the weekend, this lying between $21,300 and $21,500.
After the release of the consumer price index, Crypto Ed, a popular trader, noted on Twitter that Bitcoin had erased the previous swing lows. The decline in the price action also affected US equities. The S&P 500 is down 3%, and the Nasdaq Composite Index dropped by around 4%.
According to Jurrien Timmer, the global macro director of Fidelity Investments, there was no point in expecting a risk asset renaissance until the Fed stopped raising interest rates.
Crypto Rout Sparked by CPI Print
BTC/USD immediately fell after the consumer price index for August came in at 8.3%, which was higher than the expected figure of 8.1%. The overshoot suggests that inflation is still not slowing down.
Despite the overshoot, year-on-year growth in the consumer price index was still lower at 0.2%. That helped keep the overall trend of slowing down inflation in check. Bitcoin was trading at around $21,500 at the time of writing, down 4%. As investors increased their bets on a potential rate hike by the Federal Reserve next week, Bitcoin and other risk assets started to feel the cold feet.
According to Michal van de Poppe, the founder and CEO of Eight, a trading firm, excessive trading is not advised due to the volatility that can occur during these events. He also noted that investors should avoid getting carried away by the current market conditions.
The strong dollar index, which tends to affect crypto assets, bounced back after the consumer price index peaked at 109. That was the first time it passed the mark in over a month.