Why is the crypto market down today? (Aug. 22)

The crypto market is down today, August 22, as sentiment wanes and participants await Federal Reserve chair Jerome Powell’s speech at the Jackson Hole Symposium.

Bitcoin (BTC) dropped to the important support at $112,000, down by 10% from its highest point this year. Other tokens like Fartcoin (FARTCOIN), Sky (SKY), and Chainlink (LINK) fell by over 5%, while the market capitalization of all coins fell to $3.8 trillion. 

Jerome Powell’s speech at the Jackson Hole Symposium

The main reason why the crypto market is down today is the upcoming Jerome Powell speech at the Jackson Hole Symposium. This is an important speech that will likely determine the future of interest rates this year. 

Powell’s speech will either hint towards an interest rate cut in September, as most analysts expect. He might also align with other hawkish members, such as Beth Hammack, and warn about the rising inflation. 

Powell may also strike a neutral tone and maintain that the bank will focus on the upcoming jobs and inflation data when determining whether to cut or hike. 

A dovish tone will likely boost the crypto market, while signs of higher rates for longer would accelerate the ongoing downturn. In a note to crypto.news, Gadi Chait, head of investment at Xapo Bank, said:

Slowing institutional demand as ETF outflows rise

The crypto market is also going down as institutional demand wanes. Data shows that spot Bitcoin ETFs have shed assets in the last five consecutive days. They shed $194 million on Thursday, bringing the cumulative losses in the last five days to over $1 billion, 

Similarly, spot Ethereum ETFs shed over $700 million in assets this week. This is a sharp reversal from the prior weeks, when they recorded significant inflows.

Technicals are contributing to the crypto market crash

The crypto market downturn is also linked to Bitcoin’s technicals. The daily chart shows a double-top pattern at $123,000, one of the most bearish formations in technical analysis.

Bitcoin settled at $112,000, the neckline of this pattern. A hawkish statement by Powell would confirm the bearish outlook and drag BTC toward $100,000. A dovish statement could push it higher, possibly retesting the $123,000 level.