Interest in crypto returns amid market unrest – Bitfinex
Interest in crypto returns amid market unrest – Bitfinex
Research from the crypto exchange Bitfinex suggests that risk appetite is returning to the market following recent mass liquidations and deleveraging.
In its latest report, Bitfinex highlights a growing correlation between Bitcoin (BTC) and U.S. equities, signaling a resurgence of risk-on sentiment within the cryptocurrency space, according to The Daily Hodl.
The exchange's report says that the big liquidations seen during the recent market correction may have set the stage for a more favorable market environment. Bitfinex observes that Bitcoin has started to mirror the movements of U.S. equities more closely, especially following its early August low.
Bitfinex further explains that it is not uncommon for higher-risk assets like cryptocurrencies to lag behind less volatile assets such as equities in responding to market shifts. Thus, Bitcoin is still following the patterns observed in past bull markets.
On August 23rd, the market witnessed considerable short liquidations, with $40 million in BTC perpetual futures liquidations and $140 million across all trading pairs. This was accompanied by a notable decrease in open interest, indicating a reduction in market leverage. According to Bitfinex, this reduction could create more room for price growth in both Bitcoin and other coins.
The report also discusses Bitcoin's positive reaction to recent comments by U.S. Federal Reserve Chair Jerome Powell, who hinted at potential rate cuts. Following Powell's remarks, Bitcoin's price surged to $65,000 last week.
The current market, characterized by a renewed risk-on sentiment, is supported by the prospect of interest rate cuts and the fading impact of major negative triggers, such as the distribution of seized Bitcoins by the German authorities and the near completion of Mt. Gox's repayment to its creditors.
Despite Bitcoin hovering around $62,800 (CoinMarketCap), the recent price movement reinforces the view that the crypto market is entering a phase of renewed optimism and potential growth.
Read also: Coinbase reveals how it uses ML to manage high traffic
