The global capital markets fell sharply, and Bitcoin was not immune.
After falling below $60,000 on August 4, Bitcoin plunged again at around 8:00 a.m. on August 5, falling below $53,000; it fell again at around 14:00, falling to $49,000 at one point.
The escalation of regional tensions and the unexpectedly lower-than-expected U.S. non-farm payrolls data have led to the spread of recession fears around the world, causing a sharp decline in global capital markets, and the crypto asset market is no exception. "At the same time, the market sentiment brought about by institutional selling of Ethereum (ETH) is also one of the reasons for the decline in Bitcoin.
Bitcoin continues to fall sharply
At around 14:00 on August 5, Bitcoin crashed again, falling below the $50,000 mark. As of 18:50, Bitcoin was trading at $51,200 per coin, down 15.74% in the past 24 hours.
Affected by the sharp price fluctuations, data from the coinglass website shows that as of 18:50 on August 5, 2024, the number of people who had their positions liquidated in the past 24 hours reached 290,400, with a total liquidation amount of US$1.111 billion. Among them, long orders were liquidated for US$944 million, short orders were liquidated for US$167 million, and the largest single liquidation occurred in Huobi-BTC-USD, worth US$27,000,100.
In fact, the price of Bitcoin has been falling. On the morning of July 8, Bitcoin once fell below the $55,000 mark, reaching a low of $54,320.76, with the largest intraday decline exceeding 6%. On the evening of January 3 this year, the price of Bitcoin also fell rapidly. After losing the key point of $45,000, it successively fell below the integer marks of $44,000, $43,000, and $42,000, and once fell below $41,000, with the largest decline exceeding 10%.
In fact
Last year, the price of Bitcoin plunged several times. At 11:00 on December 11, 2023, the price of Bitcoin suddenly plunged, breaking through the two integer thresholds of $44,000 and $43,000 in succession. In just 15 minutes, it once fell by more than $2,000, and the lowest price during the day was $40,413.
On November 17, 2023, Bitcoin fell 5.0% in the day to $35,535; on August 18 of the same year, Bitcoin fell by more than $3,000 in the short term, with the maximum intraday decline exceeding 13%, and once fell below the $25,000 mark; on June 5 last year, Bitcoin fell by more than $1,000 in the short term, breaking through the $26,000 mark, and the decline once expanded to more than 5%.
Earlier on the afternoon of June 18, 2022, Bitcoin once fell below $19,000 per coin, setting a new low since December 2020. As of 9 p.m. that day, the price of Bitcoin was about $19,171, a 24-hour drop of 7.41% and a cumulative drop of 33% in the past 7 days.
Affected by global stock markets
What is the reason for this round of Bitcoin price drop?
Changes in the global macroeconomic environment are a key factor. The non-farm payrolls data released by the United States recently was unexpectedly lower than expected, triggering the "Sam Rule" and causing widespread market concerns about the US economic outlook. It also led to the spread of recession fears around the world. The global capital market has ushered in a sharp decline, and the crypto asset market is not immune.
“In addition, institutional selling of ETH (Ethereum) also boosted market sentiment, triggering a large number of automatic sell orders, exacerbating the decline in Bitcoin prices. The increase in leveraged trading also amplified price fluctuations. When the market began to fall, the forced liquidation of leveraged positions further accelerated the speed and magnitude of the decline.”
The value of Bitcoin is more determined by market supply and demand and investment trust. With the increasing participation of institutional investors and the emergence of new financial products, the volatility of Bitcoin prices may increase. This round of decline is mainly due to the impact on the financial market, the decline of risky assets, and the small market value of the entire cryptocurrency market, so the volatility will also be greater.
The decline of Bitcoin is part of the overall price decline in the global capital market. The US non-farm payroll data that was lower than expected was the most direct trigger for the decline in the global capital market. The concerns of various investment institutions about the investment bubble in the new round of industrial revolution represented by artificial intelligence were also an important reason for the decline in the global capital market. In addition, Buffett's large-scale reduction of Apple positions, the further intensification of political and military conflicts around the world, and concerns about the results of the future US presidential election also contributed to the decline in the global capital market.
This round of Bitcoin price decline was mainly driven by several factors: First, weak U.S. non-farm payrolls data and slowing growth of major technology stocks have increased market concerns about a global economic recession, and this pessimism has spread to the cryptocurrency market; second, geopolitical conflicts have increased market uncertainty, and investors' risk aversion has increased, putting pressure on risky assets such as Bitcoin; third, large institutions have sold hundreds of millions of dollars in crypto assets in the past few days. This selling behavior has exacerbated market panic and impacted Bitcoin prices.
The market outlook will still fluctuate greatly
After this round of reduction, will the price of Bitcoin go higher or continue to fall?
In the short term, Bitcoin prices may continue to fluctuate due to factors such as market sentiment, macroeconomic data, policy changes, and geopolitical conflicts. In the long term, as an emerging asset class, the development prospects of Bitcoin and other cryptocurrencies depend on factors such as technological progress, market acceptance, regulatory policies, and the global economic environment. With the continuous maturity of blockchain technology and the expansion of application scenarios, Bitcoin and other cryptocurrencies are expected to play a greater role in the future.
As for the future trend of Bitcoin, from a macro perspective, it still depends on the trend of the global monetary and financial market. At the micro level, with the rise of the second-layer Bitcoin network, the positioning of Bitcoin has gradually expanded from decentralized digital gold to the underlying infrastructure of decentralized applications. Therefore, this also means that the narrative logic of Bitcoin will undergo major or even fundamental changes. This change will not only strengthen the price of Bitcoin itself, but also bring a considerable impact on other cryptocurrencies.
Taking into account the recent macroeconomic environment and other factors, the trend of Bitcoin may continue to show high volatility. In the short term, Bitcoin may maintain a wide range of ups and downs under the combined effect of multiple factors. In the medium and long term, the trend of Bitcoin will still depend on its own development factors, including technological innovation, market demand and regulatory environment. In terms of technological innovation, the continuous development of Bitcoin and its underlying technology blockchain will continue to promote its application and value growth.
In addition, the regulatory environment is also an important factor in determining the medium- and long-term trend of this market. The regulatory policies of countries around the world on digital assets are still evolving. Active regulatory policies may promote the legalization and widespread application of digital assets, and facilitate more institutional investors to enter the market. Bitcoin's status as "digital gold" will be further consolidated during market turmoil, but its price is still affected by market sentiment and high-leverage speculation, which makes Bitcoin's price volatility still high. Therefore, investors need to be cautious when investing in Bitcoin and do sufficient market research and risk management.
