As a result of extreme caution in financial markets throughout the world, cryptoassets like Bitcoin and Ether saw a precipitous decline on Monday.
Bitcoin fell 12% to $52,827 on the market. The previous week saw a decrease of 13.1%—its worst drop since the FTX exchange crash in 2022—and this move lower maintained that trend. Meanwhile, Ether's price fell 17% to $2,221 – its worst weekly decline since 2021 — pushing its overall loss to above 30%. Throughout the cryptocurrency market, prices have fallen by almost 12% in the last day.
Anxieties about rising geopolitical tensions in the Middle East have investors worried about a US economic downturn. A risk-off attitude among investors is being driven by the concoction of economic uncertainty and geopolitical volatility.
Risk Averse Investors Worry About Weak Job Growth and Mounting Unemployment
A significant downturn in the labor market was suggested by the very low job growth in July and an unusually high unemployment rate. Crypto derivatives platform Flipster CEO Yongjin Kim noted that this has increased recession worries, which have caused the Nasdaq and S&P 500 to fall by 2.43% and 1.84%, respectively.
Kim pointed out that the market's perspective has changed as a result of the growing likelihood of Harris's victory and the waning influence of the Trump rally. Further unsettling investors is the fact that Jump Trading has moved $ETH to a controlled exchange, leading many to believe that the exchange is planning to leave the cryptocurrency industry in the wake of a CFTC probe. Investors want more information on Jump Trading's status, election predictions, and possible purchasing opportunities at the present market levels because of these occurrences, Kim noted.
On August 2nd, Bitcoin exchange-traded funds (ETFs) had their largest withdrawal in three months. Fears of a fresh bear market were stoked by this massive withdrawal. To what extent these exchange-traded funds (ETFs) can entice new purchasers at reduced rates or whether the selling pressure will persist is currently being actively monitored by investors.
Bitcoin's price may fall even more if large-scale investors pull their money out of Bitcoin ETFs, which is a common sign of a market sell-off. The most recent $237 million withdrawal is the fourth biggest since the ETF's inception in January, and the biggest single-day withdrawal in three months. The present pessimism among investors is borne out by this substantial outflow.
Concerns About Possible Oversupply and Government Sales Put Pressure on Crypto Market
The prospect of a government sale of Bitcoin and an oversupply of tokens returned to creditors in bankruptcy proceedings are further challenges facing the cryptocurrency market.
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