Bitcoin Price Plummets Below $62,000
Bitcoin’s attempt to post modest gains during Friday’s U.S. trading session quickly fizzled as the largest cryptocurrency plummeted from $65,000 to below $62,000. The sharp decline triggered a wave of liquidations, wiping off $290 million from long and short positions in the past 24 hours.
Market Sentiment Turns Bearish
The recovery rebound ahead of the Federal Open Market Committee (FOMC) meeting and positive July Consumer Price Index (CPI) data initially set a bullish tone. However, the long-awaited rate cut was postponed, leading to a shift in market sentiment. Enthusiasm quickly faded as bond yields and the dollar fell sharply on Friday after weak U.S. jobs data for July.
Normally, such a situation would boost risk assets like stocks and Bitcoin. However, Bitcoin, after initially rising above $65,000, succumbed to widespread risk aversion and fell below $62,000. High unemployment rates and weak macro sentiment have raised expectations of a future recession, impacting cryptocurrencies as a whole.
Genesis Trading Triggers Sell-Off
In addition to bearish momentum in the market, Genesis Trading executed a sell-off affecting Bitcoin and Ethereum, involving over $1.5 billion. This move resulted in a 2.2% drop in Bitcoin and a 2.5% drop in Ethereum in just an hour. The transaction, involving 16,600 BTC and 166,300 ETH, seemed to be aimed at providing in-kind repayment to creditors.
Impact of Supply Shocks
The cryptocurrency market faced downward pressure due to several supply shocks. Actions such as the German government selling 50,000 Bitcoins, the distribution by the bankrupt exchange Mt. Gox, and the imminent sale of hidden Bitcoin assets by the US government have all contributed to the turmoil.
Outflows from Bitcoin exchange-traded funds (ETFs) further complicated the situation, with net outflows totaling $237 million on August 2. Notable ETFs like Grayscale ETF GBTC, Fidelity ETF FBTC, and BlackRock ETF IBIT experienced significant daily net outflows and inflows.
