Bitcoin, Ether and other cryptoassets faced a sharp downturn on Monday over widespread risk aversion in global markets.
As of 3:50 UTC, Bitcoin traded 10% lower at $54,207. This move downward continued a decline from the previous week when it fell 13.1%—its largest drop since the FTX exchange collapse in 2022. At the same time, Ether dropped 20% to $2,326, bringing its total loss to nearly 30% over the past week — its steepest fall since 2021. The entire crypto market is down nearly 12% in the last 24 hours.
Investors are increasingly concerned about the possibility of a US recession, exacerbated by growing geopolitical tensions in the Middle East. This combination of economic uncertainty and global instability is driving a risk-off sentiment among investors.
BREAKING: OVER $800M LIQUIDATED IN THE PAST 24 HOURS pic.twitter.com/lVqqgHAC2M
— DEGEN NEWS (@DegenerateNews) August 5, 2024
Investors Pull Out $237M from Bitcoin ETFs, Marking Largest Outflow in Months
Bitcoin exchange-traded funds (ETFs) experienced their most significant outflow in three months on Aug. 2. This large-scale withdrawal fueled speculation about the potential for a new bear market. Investors are now closely watching to see if these ETFs will attract new buyers at lower prices or if the selling pressure will continue to intensify.
Large-scale withdrawals from Bitcoin ETFs are typically indicative of a broader market sell-off, which can further depress Bitcoin’s price. The recent $237m outflow represents the largest single-day withdrawal in three months and the fourth largest since the ETF’s launch in January. This significant outflux highlights the current bearish sentiment among investors.
Crypto Market Under Pressure from Potential Surplus Supplies and Government Sales
The crypto market is also grappling with potential government Bitcoin sales and the possibility of a surplus supply from tokens returned to creditors in bankruptcy cases.
Moreover, the recent liquidation of $830.8m worth of bullish crypto derivatives positions within a 24-hour period, as indicated by Coinglass data, suggests that leveraged bets are unraveling.
