According to CryptoPotato, the cryptocurrency market experienced significant volatility this week, primarily influenced by factors related to the United States. Bitcoin's price saw a dramatic decline, dropping by $10,000 from Monday to Sunday morning. Several key reasons have been identified for this downturn.
The week began positively for Bitcoin, with its price surging by $3,000 on Monday, reaching $70,000 for the first time since early June. This spike followed former President Donald Trump's appearance at the 2024 BTC conference in Nashville, where he made several pro-crypto statements, including a promise to fire SEC Chair Gary Gensler if elected. However, this optimism was short-lived as Bitcoin's price fell by $4,000 later on Monday and continued to decline throughout the week. By Friday evening, Bitcoin had dropped to $62,200 following the release of the US July jobs report, which indicated a higher-than-expected unemployment rate of 4.3%, the highest since October 2021. This report triggered immediate declines in both Wall Street and the crypto market, with Bitcoin falling to a three-week low of just under $60,000 by the weekend.
Another significant factor contributing to Bitcoin's decline is the uncertainty surrounding the US Federal Reserve's next move. Earlier in the week, the Bank of England lowered interest rates by 0.25 basis points, joining other central banks like the ECB and the Bank of Canada in reducing rates. However, the US Federal Reserve has yet to make a similar move, maintaining rates at a multi-decade high of 5.25% to 5.50%. The pressure on Fed Chair Jerome Powell to cut rates is increasing, with Senator Elizabeth Warren urging immediate action. Lower interest rates are generally seen as positive for risk-on assets like cryptocurrencies, as they make borrowing cheaper. The uncertainty around the Fed's decision has led some investors to exit the crypto market temporarily.
ETF outflows have also played a crucial role in Bitcoin's price decline. Reports of a weak US economy and uncertainty regarding the Federal Reserve's actions have led to significant outflows from spot Bitcoin ETFs, which reached nearly $240 million on Friday, the highest in about three months. Ethereum ETFs also saw continued withdrawals for the second consecutive week. These ETF flows have historically had an immediate impact on Bitcoin's price, particularly during periods of significant outflows. Consequently, the substantial ETF outflows could be a major factor behind Bitcoin's drop to and below $60,000.
