Bitcoin Drops Below $50,000 Amid Macro Uncertainty and Geopolitical Tensions
Cryptocurrency Market Plummets: Bitcoin Hits Lowest Since February, Ether Sinks Amid Economic Uncertainty.
Key Takeaways:
- Bitcoin fell 16.53% to $49,883, its lowest level since February.
- Ether dropped 23.75% to $2,186, reaching its lowest point since January.
- Factors include disappointing U.S. job numbers, global stock market sell-offs, and U.S. election uncertainty.
The cryptocurrency market experienced a significant drawdown on August 4, with Bitcoin dropping below $50,000 for the first time since July 13. This decline is attributed to a combination of macroeconomic factors and rising geopolitical tensions, according to analysts.
Bitcoin Leads the Crypto Market Plunge
Bitcoin, the leading cryptocurrency, plummeted 16.53% over 24 hours to trade at $49,883, marking its lowest level since February.
BTC 1D chart/Source: CoinmarketCap
Ethereum, the second-largest cryptocurrency by market capitalization, also suffered substantial losses, falling 23.75% to $2,186, its lowest point since January.
As of press time, Bitcoin and Ether have slightly recovered, trading at $52,689 and $2,345, respectively.
The downturn was not limited to the top two cryptocurrencies, with other major tokens also experiencing significant drops, seeing Binance Coin (BNB) declining 22.8% and Ripple (XRP) falling 19.8%.
Overall, the entire crypto market experienced a 13.09% decrease in the past day.
Research and market trends firm Layergg attributes the decline to several factors.
It revealed that $370 million has been liquidated from the crypto market, as well as Berkshire Hathaway dumping more shares this quarter than ever before, which the market reads as “a major recession red flag.”
This has intensified recession fears, leading to drops in major stock indices like the Nasdaq (2.43%) and S&P 500 (1.84%).
The downturn appears to be spreading globally, with Japan's Nikkei 225 and Topix indices plunging about 7% in Asia, nearing bear market territory.
This followed the Bank of Japan's decision to raise its key interest rate to about 0.25% from a range of zero to 0.1%.
Adding to the market volatility is the uncertainty surrounding the upcoming U.S. election.
Decentralized prediction platform Polymarket currently gives Kamala Harris a 45% chance of winning, up from 30% when Biden endorsed her as his successor.
Furthermore, potential instability in the Middle East is contributing to overall market concern among investors.
Market Reactions and Analysis
Jeff Dorman, chief investment officer of crypto asset management firm Arca, suggested increased support for Harris in the U.S. presidential race could be “bad for crypto.”
He noted that while Democrats might be less hostile towards crypto, the entire equity and crypto market appears to favor a Trump win.
Despite the significant market downturn, which saw approximately $500 billion wiped off crypto's total market capitalization in the last 72 hours (the largest three-day sell-off since August 2023), there are signs of potential recovery.
Bitcoin's market dominance reached a new yearly high of 57.18% in the early hours of August 5, indicating its relative strength compared to other cryptocurrencies during this period of market stress.
Jimmy Aki
Drawing from his background in economics, Jimmy has monitored blockchain development for years, firmly believing in its power to democratise finance. Beyond offering commentary on the latest crypto developments, he also spends his time analysing open-source codes of promising projects on GitHub. Jimmy holds Bitcoin and Ethereum.
Related Posts
Updated Dec 21st, 2024
Bitcoin and Ether Prices Decline as BTC ETFs Hit Record-Breaking Outflows
Updated Dec 21st, 2024
Fake Satoshi Gets Suspended Sentence in Identity Fraud Case
Updated Dec 20th, 2024
Powell Slams Door on Fed Bitcoin Holdings
