What a week it’s been in all markets, including crypto. I give you this update today, on my birthday, because this can’t wait. The Vix spiked above 60 this week, the highest level since March of 2020. As always, you can watch my full analysis in the video here or read my recap below.

Japan’s Interest Rate Hike and Its Impact

We have to start with what’s been going on with Japan. I won’t go into a deep dive, but here’s a brief recap from my understanding.

After years of maintaining a 0% interest rate, the Bank of Japan decided to raise its interest rates by a quarter point last week. This increase from 0% to 0.25% seems to have spooked a lot of investors and ruffled many feathers. Over the last year, one of the most popular trades on Wall Street has been the Japanese Yen carry trade, which involves borrowing yen at 0% and then seeking yields elsewhere. This trade was significantly impacted by the interest rate rise, even by just a quarter of a percentage point.

We must remember that there is a lot of leverage in the system, and simply raising interest rates by a quarter percent can have massive ripple effects. What we’ve seen is an unwinding of the Japanese yen carry trade. On Friday, the Japanese stock market, the Nikkei, had its worst day in eight years, plummeting around 6% to 8%. This decline was followed by another significant drop on Monday. All in all, the Nikkei lost about 20% in those two trading sessions, which is enormous for any large stock market in such a short period.

Ripple Effects on Global and Crypto Markets

This market panic spread globally, and the crypto market was no exception. As the only market open during the selloff on Sunday night was the crypto market, we saw significant sell-offs in both the stock and crypto markets. The phrase “in times of panic, sellers don’t sell what they want; they sell what they can” rings true here, and given that crypto trades 24/7, it bore the brunt of the selling pressure, taking prices down with it.

Bitcoin Update

Let’s hop over to the charts to see what happened. Our trusty Bitcoin chart shows that we had made a solid recovery in July, bottoming out at about $53,500 on July 5th. Bitcoin then climbed to $70,000 on July 29th, just 11 days ago. It was only $3,000 under its all-time high. Following Trump’s speech at the Bitcoin conference, where he announced potential plans for a strategic Bitcoin reserve, Bitcoin sold off slightly, a classic “buy the rumor, sell the news” event.

By Friday, when the Japanese stock market began to plummet, Bitcoin was sitting around $64,000-$65,000. The initial day of selling in Japan took Bitcoin down to just above $61,000—a 6% loss, which isn’t unusual for Bitcoin. However, the subsequent days saw further declines, culminating in a steep drop from $58,000 to under $50,000 on Sunday night.

The price briefly dipped below $50,000 before buyers came in, pushing it back to about $54,000. This move means we’ve now seen a pattern of lower lows and lower highs. It’s important not to jump to conclusions with such a move. Over the next few days, we need to see if Bitcoin can maintain levels above the July 7th low to determine our short-term trajectory.

Despite the immediate consequences, such as pushing back any potential rally into the next leg of the bull market, long-term prospects remain bullish. We may see Bitcoin retest the $50,000 support level once more before making significant moves up or down. This period of correction is longer than any mid-bull market correction I’ve witnessed in my seven years of trading cryptocurrencies.

Strategic Moves and Advice for Investors

In times like this, it’s crucial to stay level-headed. The fundamentals of Bitcoin remain strong, and while predicting short-term movements is challenging, we must stay prepared. Subscribers of my premium service know that we took advantage of the lower levels on Monday to buy a couple of different assets, reflecting my confidence in a forthcoming rally in August, albeit not breaking the downtrend immediately.

Closing Thoughts

To wrap up, the altcoin market is currently performing worse than Bitcoin, and there is a general sense of macroeconomic panic globally, with concerns in Japan, potential issues in the Middle East, and worries about the US economy and job market. It’s essential to evaluate the data in front of us and let the price charts guide our decisions.

These selloffs are painful, but they are often the best opportunities for bold moves. Remember, most fortunes are made during times of fear, uncertainty, and doubt. Those who buy during these times typically fare well, while those who can remain level-headed when the market is euphoric tend to succeed in the long run. Stay vigilant, patient, and let the market play to your advantage.

Editor’s Note: Cryptocurrency has been the best returning asset class of the last decade and is know for its parabolic bull markets. It is also a key to a truly diversified portfolio and one of the best hedges against the potential risks that lie ahead in markets. But you need to act now before institutions gobble it all up.

If you’re worried you can’t figure out crypto… don’t be. Our in-house crypto expert, Alex Benfield, will walk you through everything you need to know about crypto, step by step.

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