Like a diva refusing the intermission, the crypto sphere offers us a new drama. Indeed, Bitcoin, the queen of cryptocurrencies, has just bowed under the fateful threshold of $90,000. A level it hadn't seen in several months. Ether, its faithful knight, also followed the movement with the elegance of a rock... falling below $3,000. In the face of this hemorrhage (more than $900 million liquidated in 24 hours, mainly from greedy 'long' positions), the question is simple: who pulled the flush? The culprits are many.
⚪️ The rate downgrade:
One of the main reasons lies not in some obscure hack, but in the boring yet powerful macroeconomics. Analysts agree that we are witnessing a 'risk-off environment'.
As a reminder, a 'risk-off environment' (or 'risk aversion environment') is a period where investors, becoming fearful and uncertain about the economic or geopolitical future, massively withdraw their capital from assets deemed risky or volatile.
However, in our case, the hope for a rapid decline in U.S. interest rates has receded like an electoral promise. When financial conditions tighten, when the cost of credit rises, liquidity becomes scarce. And Bitcoin, despite its aura of 'new gold', remains perceived by many as a 'high beta asset'. In other words, a risky bet.
⚪️ Artificial Intelligence steals the spotlight
The fear of the future could well torpedo the current market. In addition to the financial gloom, a new concern looms: the bubble of Artificial Intelligence (AI).
As technology stocks are driven upwards by enthusiasm for AI, investors wonder whether the massive capital expenditures (CapEx) of tech giants to finance these monumental projects are viable in the short term. This anxiety creates contagion. The crypto market, increasingly correlated with the health of the tech sector, suffers the backlash.
In short, there are fears that the big AI event will not only divert capital but also attention, leaving digital assets in the shadows.
To top it all off, technical analysis has seen the emergence of a sinister 'Death Cross' on Bitcoin's chart, this sell signal that gives cold sweats to traders.
⚪️ Drop in BTC and ETH: a return to reason?
So, should we cry wolf and stash our cryptos at the back of the drawer? Not at all.
Certainly, the market is in a full-blown nervous crisis. But let's keep a cool head. Some analysts, like the inveterate optimist, remind us that this type of correction is inherent in the 'volcanic' nature of cryptocurrencies. It may just be a simple 'repositioning' or a 'short-term purge' after a frenzied run.
What we take away from this debacle is the convergence of three forces: the wind of macroeconomic panic fueled by rates, existential doubt surrounding the AI bubble which weakens risky assets, and the internal hemorrhage of liquidations which amplifies the fall. It is the eternal dialectic of the market: fear versus greed, but this time, caution has taken the upper hand.
While we wait for these headwinds to calm, caution is in order. It's time to reread Baudelaire's The Flowers of Evil, for the beauty of recent performance seems to have given way to melancholy. To navigate methodically through volatility, ambition and especially caution, the mantra is clear: 'Steady Lads'. It's this spirit of resilience, strategy, and collective learning that we encourage with pro trader Cara and the transparent management of a portfolio: staying strong together to deploy capital with a clear vision in the face of challenges. After the rain, it seems that flowers... bloom again.
