There are indications that further volatility is coming. New yearly lows are likely due to the lack of a Bitcoin futures premium, $470 million in liquidations, and excessive stablecoin lending.
On Friday, August 19, the overall market value of cryptocurrencies fell by 9.1%, but more significantly, the crucial psychological support level of $1 trillion was reached. Investors were very certain that the $780 billion overall market low on June 18 was nothing more than a distant memory after the market’s most recent dip below this level occurred just three weeks ago.
After the U.S. House Committee on Energy and Commerce stated that they were “very concerned” that proof-of-work mining could boost demand for fossil fuels, regulatory uncertainty grew on August 17. U.S. politicians consequently asked the cryptocurrency mining businesses for data on electricity usage and typical prices.
Reasons Why Bitcoin’s Prices Are Going Down:
Usually, currencies that aren’t among the top 5 assets by market capitalization are more affected by sell-offs, but today’s correction showed losses ranging from 7% to 14% across the board. Ether (ETH) displayed a 10.6% decline at its $1,675 intraday low, while Bitcoin (BTC) experienced a 9.7% loss as it tested $21,260.
Given the asset’s 67% annualized volatility, some experts would argue that jarring daily corrections like the one we saw today are more common than exceptional. As an illustration, the intraday decline in the overall market capitalization today topped 9%, which hasn’t happened in 19 days over the previous 365. Still, several aggravates are making this correction stand out right now.
Due to sellers’ increased demand to delay settlement for a longer period, fixed-month futures contracts typically trade at a little premium to standard spot markets. Technically referred to as “contango,” this circumstance is not specific to digital assets.
