Bitcoin (BTC) is coming under pressure from a pervasive bearish sentiment that contrasts with last week’s optimism.
In the past seven days, BTC is down over 11% to hit fresh lows of $25,000 with little to no sign of a trend reversal in sight. Parallel to the strong fall in value, the transaction volume of the asset class has fallen by almost double digits and is now at 15.7 billion US dollars.
Bitcoin’s sudden drop makes it the worst week for the asset class since FTX collapsed in November 2022. However, the change in wealth for the largest cryptocurrency was no fluke, it was the confluence of several factors.
Earlier in the week, there were unconfirmed reports that Elon Musk’s SpaceX was selling its approximately $375 million worth of BTC holdings. Reports of the sale sparked panic among traders as liquidations surpassed the $1 billion mark.
As Bitcoin’s price fell, short-term traders rushed the markets looking for profits from volatility after three weeks of sideways trading. Onchain analytics firm Glassnode reported that BTC active supply fell to a 30-day low of 680,353.0287 BTC between a week and a month.
Experts have cited other macroeconomic factors as reasons for BTC’s decline, including Chinese real estate giant Evergrande’s filing for bankruptcy. Experts believe that despite China’s ban on virtual currencies, the company’s implosion may have sparked a contagion effect. Unconfirmed reports suggest Chinese investors are relying on VPNs to trade the asset class.
In North America, US Treasury yields are hitting new highs as Fed rate hikes begin to take effect. Yields are now at a 10-year high, attracting investors fleeing the BTC turmoil, and equities are seeing capital flight.
While the direction of BTC price remains uncertain, investors are eagerly awaiting the release of the August Consumer Price Index (CPI) and Personal Consumption Expenditure (PCE) figures. Ahead of the September FOMC meeting, it is unclear whether or not the Fed will make further rate hikes.
Other assets are in the red
Bitcoin’s descent swept other digital assets with it, leaving markets in a sea of red.
Ethereum (ETH), the second largest cryptocurrency by market cap, fell 5% while XRP lost 10.54% of its value as its case against the United States Securities and Exchange Commission (SEC) enters a new chapter.
Dogecoin (DOGE), Solana (SO), and Shiba Inu (SHIB) all posted losses of 5.14%, 8.99%, and 5.07%, respectively, in a tragic week for virtual currencies.
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