Bitcoin experienced a roller-coaster week, clawing back 5% on Tuesday after a severe downturn. This rebound followed its steepest decline since the infamous collapse of Sam Bankman-Fried’s FTX exchange in November 2022. Over the past week, Bitcoin plummeted by 20%, touching its lowest points on Sunday and Monday amid a broad market correction. At one point, its value dipped below $50,000, a price not seen since February, resulting in a loss of over $13,000 within seven days.
Ether, the second-largest cryptocurrency, faced even harsher conditions. It nosedived 27% over the week, experiencing its largest single-day drop since late 2021. This crypto market sell-off came on the heels of optimistic developments that had rekindled investor hopes. Many believed a new bull market was on the horizon, seemingly signaling a recovery from the severe 2022 downturn that took down major players, including FTX.
Bitcoin rebounds 8.5% after a sharp 29% correction, the deepest in this cycle. ETFs remain resilient with no outflows from BlackRock’s IBIT. #Bitcoin #BTC #Crypto
Read More: https://t.co/VlWyI3DakE
— cryptoknowmics (@ckmnewsfeed) August 6, 2024
Just a fortnight ago, Bitcoin was flirting with its all-time high of $74,000, buoyed by former President Donald Trump’s anticipated speech at a Bitcoin conference in Nashville. The endorsement from a prominent political figure had the industry buzzing about potential regulatory leniency in Washington, D.C., post-2025.
Investors’ enthusiasm was also fueled by the Securities and Exchange Commission’s green light for new exchange-traded funds (ETFs) holding Ether. This development is part of Wall Street’s growing embrace of cryptocurrencies, potentially integrating Ether into mainstream financial vehicles like 401(k)s, IRAs, and pension plans. Such acceptance could cement its status in the financial ecosystem.
However, these new financial products may pose short-term challenges. According to Noelle Acheson, writer of the Crypto Is Macro newsletter, ETFs’ inability to trade on weekends could lead to a backlog of sell orders, potentially destabilizing the market. Last week, digital asset ETFs and other investment products experienced their first weekly outflows in a month, amounting to $528 million, with Bitcoin bearing the brunt.
#Bitcoin rebounds after testing the 50-week MA. Additionally, a massive gap in the CME BTC has formed! In this case, $BTC could retest around the 62.5 level to fill the gap. On a positive note, yesterday’s daily candle also closed within the megaphone pattern👀
You Bearish or… https://t.co/HI87rIFxLr pic.twitter.com/ZXo8fx7OGF
— Anup Dhungana (@CryptoAnup) August 6, 2024
Despite the market turbulence, some analysts urged calm. Gautam Chhugani, a senior analyst at Bernstein, pointed out that Bitcoin’s institutional adoption trends, such as ETF inflows and approvals from financial institutions, remain positive. He also highlighted that U.S. politics could be a significant short-term catalyst for the crypto markets.
The market’s recent swoon was exacerbated by high leverage. Within a 24-hour period by mid-Monday, about 307,000 traders saw over $1.23 billion in crypto derivatives liquidated, as reported by CoinGlass. While liquidations decreased throughout the day, Bitcoin accounted for a significant portion of the losses, with a notable $27 million long position being wiped out on the China-based exchange Huobi.
Crypto-related stocks mirrored the market’s volatility. Coinbase, a major U.S.-based exchange, saw its stock close down 7.32% on Monday. MicroStrategy, the largest corporate holder of Bitcoin, dropped 9.60%. Meanwhile, Bitcoin miners Marathon Digital and Riot Platforms experienced milder declines, closing down 1.40% and 3%, respectively.
Major Points
- Bitcoin rebounds 5% after its worst week since FTX collapse.
- Cryptocurrency market experiences significant volatility with Bitcoin falling 20%.
- Ether takes a 27% hit, marking its largest single-day drop since 2021.
- New SEC-approved ETFs could impact market stability.
- Institutional adoption trends continue despite market fluctuations.
Fallon Jacobson – Reprinted with permission of Whatfinger News
