Despite displaying strength on Tuesday, cryptocurrency prices have continued their shaky start at the beginning of the week, dropping significantly in the past 24 hours. The total crypto market capitalization has plunged 4.92% over the past day to $924 billion, triggering a sell-off for several large-cap coins.
Bitcoin (BTC) hit new weekly lows below $18,500, and it’s down 7.5% from Tuesday’s high above $29,400 to the current price of around $18,890. The now proof-of-stake Ether (ETH) has lost 6.8% over the last day to trade just above $1,290. The biggest loser amongst the top cryptos is XRP which plummeted 9.5% on the day. The losses are 6.45% for Solana (SOL), 5.35% for Cardano (ADA), and 4.3% for Binance Coin (BNB), according to data from CoinMarketCap.
Strengthening Dollar Diminishes Hope for Market Recovery
One of the most notable trends in the crypto market has been its inverse relationship with the dollar and its seeming correlation with equities.
The trend was again confirmed over the weekend when the US Dollar Index (DXY) hit new record highs against several major currencies, including the British Pound, Euro, and the Japanese Yen. However, this rally appears to be going on.
On Wednesday, the USD Dollar index reached another new high at 114.6%, up 0.37% in the past 24 hours. It appears that this rally in DXY has fueled a sell-off in cryptocurrencies.
In the same manner, stocks appear to be experiencing similar headwinds. The S&P 500 and Nasdaq Composite Index are down 0.21% and up 0.25%, respectively.
With the dollar rallying and the digital asset’s failure to sustain Tuesday’s recovery, traders are betting on continuing pain.
Historic September Continues To Jinx The Market
Another massive catalyst of the ongoing downturn appears to be the possibility for the market to record yet another September in red.
September is known for being a relatively lousy month for the cryptocurrency market. With Bitcoin currently down 5.04% from the start of the month, the asset could continue its streak of finishing September in red as it has been since 2016.
Crypto analysts appear to have resigned themselves to a red September, with Popular Twitter account Il Capo of Crypto saying that he was waiting for a favorable October, which was a good month for the crypto market in 2021, earning the nickname “Uptober.” He tweeted, “Yes, expecting bullish Q4. But first new lows.”
Another famous trader Rekt Capital focused on the monthly roadblocks Bitcoin needed to overcome to secure a favorable month in October. He stated in a tweet:
“Already a sharp #BTC rejection at the green ~$19800 level. Continued see-sawing in and around this level is expected as $BTC approaches its Monthly Close. Most important will be how the Monthly Candle closes relative to the green Range Low.”
According to Rekt Capital, a monthly candlestick close below $19,800 would mean an exit from the monthly range that has been in place since 2020. This would confirm a bearish finish for the cryptos in September, which could lower the prices.
Bears Appear Not To Be Going Anywhere
Analyzing whether the 2022 bear market could end soon, data from previous cycles show that we are not there yet. A comparison of the 2022 and 2018 market conditions reveals that it has been 322 days since BTC hit all-time highs of $69,000 in November 2021. In contrast, Bitcoin spent 364 days in a bear market after the 2017 ATH.
Although this suggests that the bear market could end if history repeats itself, the current macro environment is nothing like it was in 2018.