Decentral Block Post

After the rising wedge formation was broken on Aug. 17, the total crypto market capitalization quickly dropped to $1 trillion and the bulls' dream of recouping the $1.2 trillion support, last seen on June 10, became even more distant. 

The worsening conditions are not exclusive to crypto markets. The price of WTI oil ceded 3.6% on Aug. 22, down 28% from the $122 peak seen on June 8. The United StatesTreasuries 5-year yield, which bottomed on Aug. 1 at 2.61%, reverted the trend and is now trading at 3.16%. These are all signs that investors are feeling less confident about the central bank's policies of requesting more money to hold those debt instruments.

Recently, Goldman Sachs chief U.S. equity strategist David Kostin stated that the risk-reward for the S&P 500 is skewed to the downside after a 17% rally since mid-June. According to a client note written by Kostin, inflation surprises to the upside would require the U.S. Federal Reserve to tighten the economy more aggressively, negatively impacting valuations.

Meanwhile, extended lockdowns supposedly aimed at containing the spread of COVID-19 in China and property debt problems caused the PBOC led the central bank to reduce its five-year loan prime rate to 4.30% from 4.45% on Aug. 21. Curiously, the movement happened a week after the Chinese central bank lowered the interest rates in a surprise move.

Crypto investor sentiment is at the edge of ‘neutral-to-bearish’

The risk-off attitude brought by surging inflation led investors to expect additional interest rate hikes, which will, in turn, diminish investors' appetite for growth stocks, commodities and cryptocurrencies. As a result, traders will likely seek shelter in the U.S. dollar and inflation-protected bonds during periods of uncertainty.

After the rising wedge formation was broken on Aug. 17, the total crypto market capitalization quickly dropped to $1 trillion and the bulls' dream of recouping the $1.2 trillion support, last seen on June 10, became even more distant. 

The worsening conditions are not exclusive to crypto markets. The price of WTI oil ceded 3.6% on Aug. 22, down 28% from the $122 peak seen on June 8. The United StatesTreasuries 5-year yield, which bottomed on Aug. 1 at 2.61%, reverted the trend and is now trading at 3.16%. These are all signs that investors are feeling less confident about the central bank's policies of requesting more money to hold those debt instruments.

Recently, Goldman Sachs chief U.S. equity strategist David Kostin stated that the risk-reward for the S&P 500 is skewed to the downside after a 17% rally since mid-June. According to a client note written by Kostin, inflation surprises to the upside would require the U.S. Federal Reserve to tighten the economy more aggressively, negatively impacting valuations.

Meanwhile, extended lockdowns supposedly aimed at containing the spread of COVID-19 in China and property debt problems caused the PBOC led the central bank to reduce its five-year loan prime rate to 4.30% from 4.45% on Aug. 21. Curiously, the movement happened a week after the Chinese central bank lowered the interest rates in a surprise move.

Crypto investor sentiment is at the edge of ‘neutral-to-bearish’

The risk-off attitude brought by surging inflation led investors to expect additional interest rate hikes, which will, in turn, diminish investors' appetite for growth stocks, commodities and cryptocurrencies. As a result, traders will likely seek shelter in the U.S. dollar and inflation-protected bonds during periods of uncertainty.

The European stock markets and the United States equities markets are both deep in the red on Aug. 22 as investors fear that aggressive rate hikes may not be off the table. 

Another thing keeping investors nervous could be the upcoming  Jackson Hole economic symposium, which is scheduled to begin on Aug. 25. Investors are concerned that Federal Reserve chairman Jerome Powell could further elaborate on the Fed's hawkish stance and plans for future interest rate hikes.

This macro uncertainty has kept the institutional investors away from the crypto markets. CoinShares data showed that crypto investment products recorded weekly volumes of $1 billion, which is 55% lower than the yearly average.

On-chain analytics resource Material Indicators said that Bitcoin (BTC) has not broken below the July lows. This suggests that the bear market rally is not yet over. However, buyers will have to push the price above the 200-week moving average of near $23,000 to gain the upper hand.

Could Bitcoin and most major altcoins make a strong comeback in the next few days and what are the critical levels to watch out for? Let’s study the charts of the top-10 cryptocurrencies to find out.