What caused the sudden and rapid decline of Bitcoin and Bitcoin?

Recently, the price of Bitcoin (BTC) fell below the 56,000 mark, triggering panic in the crypto market. After in-depth analysis, we summarized five main factors, which cover macroeconomics, trading behavior, exchange-traded fund (ETF) flows, political polls, and regional events.

1. Macroeconomic weathervane

Friday's market signals showed a clear short-term sell signal. The US 10-year Treasury bond fell 40 basis points, oil prices fell sharply, and the stock market continued to fall. In particular, the VIX index soared 25% on Friday, which is often regarded as a barometer of market volatility. Although the VIX index has a tendency to fall back from a long-term perspective, the Fed's plan to cut interest rates in September, coupled with the fact that it is still an election year, these factors have combined to make market sentiment cautious.

2. Jump selling in trading behavior

In terms of trading behavior, there seems to be a trend to buy put options before the expected decline. Data shows that more than 90% of Ethereum (ETH) sales are conducted on exchanges. It is worth noting that although a large amount of funds exist in wallets in a stable state, these funds seem to prefer to be transferred back to wallets rather than traded on exchanges.

3. The impact of ETF liquidity

Throughout the year, the flow of the cryptocurrency market has been affected by the liquidity of ETFs. On Friday, Bitcoin saw a net outflow, while the flow of Ethereum was neutral. The new ETF puts pressure on the crypto market in the short term, but in the long run, it is a necessary evil for the development of the market.

4. The impact of political polls

The news that Kamala is ahead of Trump in the polls is not good for the crypto market. Although the Democratic Party's attitude towards crypto is relatively mild, the market as a whole seems to be more inclined to Trump's victory.

5. Middle East tensions and supply

Tensions in the Middle East and their long-term significance are questionable. This is more of a concern for short-term macro traders, and the serious attitude towards oil trading has also affected market volatility. In addition, Mt Gox's distribution is nearing the end, while Genesis distributes ETH, BTC and SOL in physical form, the pressure of Grayscale selling seems to have eased, and FTX is about to launch cash distribution.#美国7月非农就业增长放缓