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On Friday, August 19, the total crypto market capitalization dropped by 9.1%, but more importantly, the all-important $1 trillion psychological support was tapped. The market's latest venture below this just three weeks ago, meaning investors were pretty confident that the $780 billion total market-cap low on June 18 was a mere distant memory.

Regulatory uncertainty increased on Aug. 17 after the United States House Committee on Energy and Commerce announced that they were "deeply concerned" that proof-of-work mining could increase demand for fossil fuels. As a result, U.S. lawmakers requested the crypto mining companies to provide information on energy consumption and average costs.

Typically, sell-offs have a greater impact on cryptocurrencies outside of the top 5 assets by market capitalization, but todays correction presented losses ranging from 7% to 14% across the board. Bitcoin (BTC) saw a 9.7% loss as it tested $21,260 and Ether (ETH) presented a 10.6% drop at its $1,675 intraday low.

Some analysts might suggest that harsh daily corrections like the one seen today is a norm rather than an exception considering the assets 67% annualized volatility. Case in point, todays intraday drop in the total market capitalization exceeded 9% in 19 days over the past 365, but some aggravants are causing this current correction to stand out.

The fixed-month futures contracts usually trade at a slight premium to regular spot markets because sellers demand more money to withhold settlement for longer. Technically known as "contango," this situation is not exclusive to crypto assets.

In healthy markets, futures should trade at a 4% to 8% annualized premium, which is enough to compensate for the risks plus the cost of capital.

According to the OKX and Deribit Bitcoin futures premium, the 9.7% negative swing on BTC caused investors to eliminate any optimism using derivatives instruments. When the indicator flips to the negative area, trading in "backwardation," it typically means there is much higher demand from leveraged shorts who are betting on further downside.

Futures contracts are a relatively low-cost and easy instrument that allows the use of leverage. The danger of using them lies in liquidation, meaning the investors margin deposit becomes insufficient to cover their positions. In these cases, the exchange's automatic deleveraging mechanism kicks in and sells the crypto used as collateral to reduce the exposure.

A trader might increase their gains by 10x using leverage, but if the asset drops 9% from their entry point, the position is terminated. The derivatives exchange will proceed to sell the collateral, creating a negative loop known as a cascading liquidation. As depicted above, the Aug. 19 sell-off presented the highest number of buyers being forced into selling since June 12.

Margin trading allows investors to borrow cryptocurrency to leverage their trading position and potentially increase their returns. As an example, a trader could buy Bitcoin by borrowing Tether (USDT), thus increasing their crypto exposure. On the other hand, borrowing Bitcoin can only be used to short it.

Unlike futures contracts, the balance between margin longs and shorts isn't necessarily matched. When the margin lending ratio is high, it indicates that the market is bullishthe opposite, a low ratio, signals that the market is bearish.

Crypto traders are known for being bullish, which is understandable considering the adoption potential and fast-growing use cases like decentralized finance (DeFi) and the perception that certain cryptocurrencies provide protection against USD inflation. A margin lending rate of 17x higher favors stablecoins is not normal and indicates excessive confidence from leverage buyers.

These three derivatives metrics show traders were definitely not expecting the entire crypto market to correct as sharply as today, nor for the total market capitalization to retest the $1 trillion support. This renewed loss of confidence might cause bulls to further reduce their leverage positions and possibly trigger new lows in the coming weeks..

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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3 reasons why Bitcoins drop to $21K and the market-wide sell-off could be worse than you think - Cointelegraph

Popular crypto analyst Benjamin Cowen thinks one indicator is likely to determine whether Bitcoin (BTC) stays in a bear market.

In a new strategy session, Cowen tells his 764,000 YouTube subscribers that Bitcoin has historically been inversely correlated with the US Dollar Index (DXY).

The DXY measures the value of the dollar against a basket of six foreign currencies.

Says Cowen,

Now a lot of times, when you see the dollar going up, its sort of like a wrecking ball: it makes most other things go down. Generally, you could view it as people fleeing into the relative safety of the US dollar.

Cowen says the Dollar Index has been in a general macro uptrend since 2008. He notes Bitcoin bear markets have tended to correlate with the Dollar Indexs sharp moves to the upside and vice versa.

The general relationship, as weve discussed, is that as long as the dollar is going up, we would expect Bitcoin to more or less stay either in a bear market or the very early stages of its accumulation phase.

Bitcoin is trading at $21,114.98 at time of writing. The top-ranked crypto asset by market cap is down more than 16% in the past five days. Meanwhile, the DXY is up around 2.3% this week.

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One Indicator Is Likely To Determine Whether Bitcoin Stays in a Bear Market, Says Crypto Analyst Benjamin C... - The Daily Hodl

The crypto trader and analyst who accurately predicted that Bitcoin (BTC) would crash below $23,000 months prior is issuing a fresh warning on the flagship digital asset.

Pseudonymous crypto strategist Capo tells his 480,200 Twitter followers that its just a matter of time before Bitcoin falls to new lows.

In an update to an earlier analysis where he had laid out two differing scenarios for Bitcoin, Capo says that the flagship crypto asset has taken the bearish option that could lead to the price dropping below $21,000. The alternative scenario involved Bitcoin turning bullish over the short term.

BTC. Second option playing out. Any test of $23,500 as resistance is a good sell opportunity. Consolidation below $22,500 (clean break + use the level as resistance) would be very bearish = $21,000 or lower. New lows are just a matter of time.

Bitcoin is trading at $21,158 at time of writing, down over 7% on the day.

According to Capo, Bitcoin is currently in the fifth wave of the main downward trend but could correct to the upside in a three-wave pattern to the $23,500 level. The Elliott Wave theory states that the main trend of asset prices moves in a five-wave pattern (i, ii, iii, iv, v) while they undergo a correction in a three-wave pattern (a, b, c).

The crypto strategist says that $23,500 would act as strong resistance pushing Bitcoin towards the $20,000 key area.

Option for the $23,500 test as resistance.

In March when Bitcoin was trading at around the $40,000 mark, the widely followed crypto analyst predicted that the flagship crypto asset would fall to under $23,000. Bitcoin went on to hit a 2022 low of under $18,000 in June.

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Crypto Trader Who Predicted Bitcoin Collapse This Year Issues New BTC Warning - The Daily Hodl

The global crypto market has changed its direction as various coins have turned bullish. The value of Bitcoin saw improvement as it reduced losses. While in comparison, Binance Coin and others have seen considerable gains. The ongoing situation shows that the market has experienced a push from the investors. As the market turns bullish, the investors will see an increase in gains. The only thing the market needs is a continuation of the same pace.

Some analysts have raised questions over the vulnerability of Ethereum to censorship after the merge. The recent changes in the market, like sanctions against Tornado Cash, suggest that there is more to come. The Ethereum community has also initiated a discussion regarding resistance to the ongoing changes. They have debated the possibility of large validators being forced to censor transactions after merge.

Ethereum founder Vitalik Buterin believes that transaction censorship would be an attack against the network. Some Ethereum projects have begun blacklisting specific addresses after the recent sanctions. Though merge will reduce the energy consumption for Ethereum by over 90%, it will pose threats to the freedom of users. The main claim which has led to sanctions is the allegation of money laundering using specific addresses.

Here is a brief overview of the current market situation, analyzing the performance of Bitcoin, Binance Coin, and others.

Bitcoin price has fallen more than 13% in the last seven days, and it poses questions about its future. All types of elements challenged the price value of Bitcoin, but it has resisted. The ongoing changes show that Bitcoin has the potential for a comeback.

The latest data for Bitcoin shows that it has added value. The 24-hour data for Bitcoin shows a reduction of losses to 0.89%. The change in the market has resulted in the weekly losses of Bitcoin to 13.01%.

The price value for Bitcoin is in the $21,294.90 range. The market cap value for Bitcoin is estimated to be $407,414,389,973. The 24-hour trading volume of Bitcoin is about $30,876,972,769.

Binance has continued to secure permits and licenses across the globe. The latest on the list is the Money Transmitter license from the Nevada Department of Business. Recently, it has secured permits and licenses on a global level. The bearish market pushed other big exchanges backward, creating opportunities for Binance.

The value of the Binance Coin has seen a considerable increase. The latest data shows an addition of 0.94% over the last day. The weekly data shows a loss of 12.77%. The price value for the same coin is in the $287.09 range.

The market cap value for BNB is estimated to be $46,311,795,827. The 24-hour trading volume of this volume of the same coin is about $1,409,960,725.

The value of Stacks has also seen improvement, but it couldnt turn bullish. The latest data shows a loss of 2.08% over the last day. The weekly data shows a loss of 22.38%. The price value for STX is in the $0.3959 range.

The market cap value for Stacks is estimated to be $526,857,745. The 24-hour trading volume of the same coin is about $101,131,577. The same amount in its native currency is about 25,574,612 STX.

Loopring has also been in gains due to a bullish market. The latest data shows this coins gain of 0.47% over the last day. The weekly data shows a loss of 20.63%. The price value for LRC has improved to the $0.3798 range due to gains.

The market cap value for LRC is estimated to be $505,879,319. The 24-hour trading volume of this coin is about $49,975,101. The circulating supply of this coin is about 1,330,119,710 LRC.

The global crypto market has seen a change in pattern. The latest data shows the trend of gains for Bitcoin, Binance Coin, and others. As the market has seen changes, the value of various tokens has enhanced. The global market cap value has also seen a positive change recently. The latest data shows that it is currently estimated to be $1.02 trillion.

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Bitcoin, Binance Coin, Stacks, and Loopring Daily Price Analyses 20 August Morning Price Prediction - Cryptopolitan

U.S. authorities have warned about the rising popularity of a crypto scam known as pig butchering. The Federal Bureau of Investigation (FBI) explained: The fraud is named for the way scammers feed their victims with promises of romance and riches before cutting them off and taking all their money.

U.S. authorities have been warning about a type of cryptocurrency scam called pig butchering that has been growing in popularity at an alarming rate.

Lakewood Police Public Information Officer John Romero detailed:

The term pig butchering basically comes from a farmer fattening up the pig before they slaughter it. And in this case, its the suspect who was fattening up their victim.

The police officer explained that the pig butchering scam usually starts on social media or dating sites like Linkedin and Tinder, where the scammer finds and convinces the victim to hand over some funds. The scammer then puts the money into a crypto account which appears to grow in value, making the victim want to add more funds to the account. The scammer then disappears with a large amount of the victims cryptocurrency.

According to one victim of the pig butchering scam, initially, he was able to make a few withdrawals from the crypto account without a problem. Everything looked legit until he received a message telling him he had to pay more than $204K in deposits to be able to access his account.

U.S. Secret Service Special Agent Shawn Bradstreet commented:

Once they [the victims] see how easy it is to invest, they see a rise in their screen account and then they end up investing their entire life savings in a matter of days.

He added: The counterfeit sites used can look legitimate, but the money is going straight to the criminals.

The Singapore-based Global Anti-Scam Organization is a non-profit staffed 24 hours a day to help victims of pig butchering. Grace Yuen, a Massachusetts-based spokesperson for the organization, described:

We are seeing an influx of victims from the Bay Area The scam continues to get more advanced, where fake platforms are made, impersonating legitimate crypto-trading sites.

The Federal Bureau of Investigation (FBI) detailed in April: The fraud is named for the way scammers feed their victims with promises of romance and riches before cutting them off and taking all their money. The law enforcement agency added:

Its run by a fraud ring of cryptocurrency scammers who mine dating apps and other social media for victims and the scam is becoming alarmingly popular.

The Nasdaq-listed crypto exchange Coinbase also warned about Sha Zhu Pan (pig butchering) investment scams last week. Coinbase has seen a concerning increase in fraudulent cryptocurrency investment platforms that are sourcing victims through connections on dating apps and social media. We are encouraging our users to be vigilant against this type of social engineering scam, the exchange wrote.

What do you think about the pig butchering cryptocurrency scam? Let us know in the comments section below.

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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US Authorities Warn of 'Pig Butchering' Crypto Scam Becoming Alarmingly Popular Featured Bitcoin News - Bitcoin News