Bitcoin's Last Downturn Put Sentiment On 'Suicide Watch,' But Experts See A Silver Lining

In the wake of recent market turbulence that saw Bitcoin BTC/USD plummet and the VIX spike to 66, crypto and macro experts are analysing the causes and potential implications for both digital assets and traditional markets.

What Happened: Chris Cecere welcomed Bloomberg analyst James Seyffart, macro trader Alex Krüger, and Asymmetric founder Joe McCann on the latest episode of "Bits and Bips" to dissect the events and offer their perspectives on what lies ahead. They highlighted the confluence of factors that led to the market downturn, such as the Bank of Japan’s surprise rate hike, weakening economic data and large-scale selling in thin weekend crypto markets.

McCann noted the extreme sentiment, saying, "The sentiment was like suicide watch. It was so bad on Sunday night."

The experts also debated the reasons behind major crypto market maker Jump Trading's significant Ethereum ETH/USD sales during the weekend. Overall, thin order books exacerbated the price impact.

For crypto investors, the experts suggested:

• Staying alert to economic data like upcoming payroll numbers which could significantly influence market direction.
• An eye on global liquidity trends, which McCann sees as potentially bullish for risk assets if central banks coordinate rate cuts.

Also Read: Arthur Hayes Predicts $100,000 For Bitcoin Due To US Treasury Actions

Why It Matters: The panel focused on the Federal Reserve's upcoming decisions and their potential impact on crypto markets. McCann argued for a 50-basis point cut in September, stating, "We think that the Fed screwed up. We think that they should have cut in July, and I think the market agrees."

Krüger concurred, adding, “I think they need to cut 50 basis points. 50 will be bullish, 25 is either a wash or bearish, and no cut would be absolutely a disaster.”

The experts also highlighted the importance of the upcoming Jackson Hole Economic Symposium, where Fed Chair Jerome Powell is expected to signal the central bank’s intentions regarding rate cuts.

Despite the recent volatility, the panel remained cautiously optimistic about crypto’s prospects. They suggested that the market washout could provide opportunities for investors, with McCann noting, "When people really start getting this scared, it's usually when you’re very close to a bottom."

What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.

Read Next:

• Bitcoin Long-Term Holders Have Been Accumulating In July, Analysts Report

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image created using artificial intelligence with Midjourney.