It's been almost a rally of decent two continuous weeks where the crypto market was usually moving without having too much volatility. Still, today on the 19th of August, the crypto market and the entire crypto market along with the king of altcoins Ethereum have fallen down by significant percentages. Here is the most possible reason why we have seen the market crashing this fast is that the US dollar strengthening at the critical level and breaking out from the long term resistance, we will look into that in detail.

Crypto Market Overview

As you can see in the picture below that the Bitcoin is dropped below to the `~$21,400 and Ethereum to the ~$1,700, both down by almost 8% in last twenty-four hours. And the Bitcoin dominance is at 38.42%, which is down below a critical level of 40%, which was acting as strong support for past few weeks but it is broken now. And about the Fear and Greed Index of Bitcoin, it is at 33 down by 10 points since the last week and now up by 3 points in last twenty-four hours.

At the rightmost part of the picture, we can see the comparison between the long and short positions on Bitcoin at various crypto exchanges like FTX, Binance and others. Currently, the overall percentage of longs on Bitcoin across all the exchanges is 43.05% and 56.95% which clearly shows the dominance of bears in leverages market. 

Why Crypto Market Crashed?

As I already mentioned above, one of the reason that Bitcoin and entire crypto market is crashed is that the US Dollar (DXY) was about to breakout from the long standing resistance. Since US Dollar is one of the main competitor of the Bitccoin in the race of currencies and as it is strengthening which resulted in the Bitcoin dropping below the monthly opening of the Bitcoin price. You can check the picture below:

If US Dollar managed to confirm this breakout and rally towards the secondary resistance, in this scenario Bitcoin and crypto market is going to be affected negatively and can drop more. So it will be important to check whether US Dollar is going to breakout this resistance level or not. 

Why Not To Go Short Now?

If you are thinking of going short on the crypto market then you might reconsider that as the Funding Rates are going negative which will make the current users late bears now which will result loss if the Bitcoin sustain the $21k support and if Bitcoin could not manage to hold that support then there is possibility of turning it a good short trade but that will be pure luck as things are completely uncertain and since the Funding Rates are turning negative, it will be risky to go short. 

Conclusion

As discussed, US Dollar is strengthening and trying to break the current resistance and if that happen successfully then it will affect the entire crypto market negatively so be careful while trading and at the same time funding rates are turning negative, it will be very risky to go short at this time. So be cautious about your trades and trade only if you are open for the risks.

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Thanks For Your Time!