Key Takeaways
- Volatility reaches levels not seen since Covid.Â
- How rising interest rates in Japan may have caused Monday’s blood bath. Â
- Bitcoin is up 17% from Monday’s lows, but can it continue?Â
We’ve witnessed the largest volatility event in broader markets on record since the Covid crisis in 2020. We saw Bitcoin tumble from $58,200 USD on Monday open to $49,050 USD, a -15% move in less than 8 hours. However, fast-forwarding 24 hours, this whole move has now been reverted on Bitcoin. Â
Why a Rate Rise in Japan May Have Caused the Blood BathÂ
The global economy experienced hysteria on Monday, led by Japan’s stock market, which had its largest drop since 1987.
This was likely caused by the recent spike in interest rates on the Japanese Yen, striking fear into carry traders who borrow Yen for higher yields elsewhere (eg. US dollar yields or purchasing stocks). The higher interest rates, have now resulted in many hedge funds and institutions to unwind portfolios, likely attributing to the volatility and market movement’s we’ve seen.
While the markets broadly have bounced back, we will need more time to understand if there is more turmoil to come into next week. Â
Economic Calander Events
The US ISM Services Growth data was released this Monday. This measures the health of US services sector by surveying purchasing managers. The above expectations results indicate that the sector is experiencing relative growth compared to the previous month.
Next week, we have major releases to watch, and volatility could follow. We have the latest US Inflation data landing from Tuesday to Wednesday, and Retail sales data on Thursday.
Fear and greed currently reads 42.Â
Bitcoin Analysis
After making new monthly lows, the market has thus far regained the June low with haste. However, we could see these two potential scenarios into next week.
Bullish Scenario
Having broken the June low and reclaimed seeing bulls continue to defend this level in the coming days and weeks will be telling.
Bearish Scenario
Failure to hold this low could result in retesting the most recent lows and potentially below $49,000 USD. Â
💱 Flows
The buy-to-sell ratio for unique Swyftx orders is nominally >$20,000 AUD (rolling data over the last 7 days, captured at 09:00 am AEST).
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