The digital asset markets were on a parabolic rise until investor confidence was hit hard to close the week with a downward slope due to a perfect storm full of negativity.
Before reading the summary, catch up on the most read stories focused on Bitcoin’s price, the macroeconomic outlook and how the DeFi-mania is gaining momentum.
The Bitcoin price, stocks and gold all plummeted at the same time, so what can we expect now?
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The significant drop in the stock markets was led by blue chip stocks that had been at record highs. While this was happening, many tokens linked to DeFi platforms fell sharply, especially SushiSwap (SUSHI) which lost almost 40% of its value.
Bitcoin price below $10,000 caused open interest to fall $653 million, the largest since March
The correction in the traditional markets seems to have influenced the fall of Bitcoin (BTC) by more than 10% before a small rebound in the range between USD 10,300 and USD 10,400.
More is not always better
The technology sector stocks that drove US stocks to record highs this summer fell sharply this week, causing the Nasdaq Composite index to fall nearly 5% in its biggest drop since mid-June.
BTC falls below USD 10,000 and many traders think it is due to the „Gap in the CME“.
Apple shares lost 8%, subtracting more than USD 150 billion in value from the iPhone manufacturer, while Amazon, Alphabet and Microsoft fell more than 4%.
As a result, the VIX index jumped above the 30-point mark for the first time since mid-July, and the equivalent volatility index for the Nasdaq shot up to more than 40 points, almost double its mid-August low.
Historically, the VIX has only increased in the 1930s many times over and almost always leads to a significant decline.
It’s a reminder that overcrowded trades see a lot of volatility when someone starts to pull out of their positions. Digital asset traders are more than aware of this dynamic and while bullish traders may be particularly upset by their declining fortunes, this downturn offers an opportunity to rebuild.
Ethereum Bogotá invites to a virtual meeting on perspectives about ETH 2.0
The futures curve also flattened out aggressively as leveraged buyers were the first to seek coverage, and there are many opportunities in the options market to take advantage of the market’s mispricing.
