The sharp decline in both cryptocurrency and stock prices over the past few days can be explained by a combination of macroeconomic and crypto-specific factors, although the former appear to be more influential at this point. This was stated by the regional head of Binance in the SEE, Central Asia and Africa, Kirill Khomyakov.
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Why Bitcoin Fell
From a macroeconomic perspective, the past week was marked by significant volatility on Wall Street. Major indices and stock market futures fell sharply towards the end of the week due to growing recession fears. These fears were intensified after the release of the US employment report on Friday, which raised concerns about the strength of economic growth.
In addition, ongoing geopolitical tensions have contributed to market uncertainty and volatility.
Read: Bitcoin Price Plunges Below $50K, Record Drop Since 2021
In terms of cryptocurrencies specifically, the general market sell-off caused by recession fears has led to a reallocation of capital away from high-risk assets, which still includes digital currencies.
This move has been reinforced by recent dynamics in the US presidential race, which some market participants see as less favorable for cryptocurrencies as an asset class.
In the crypto market, the summer months have historically been slower than other months of the year, with consistently lower returns. These seasonal dynamics may also be playing a role.
“Despite these challenges, we do not see this as a sign of a long-term negative trend for the crypto market,” Khomyakov noted.
Read: Bitcoin fell below $61,000. The asset has fallen by 9% in a week
The Federal Reserve is expected to cut interest rates in September, which should improve the outlook for the U.S. economy.
Additionally, with the upcoming presidential election, there remains significant potential for market volatility. As the election approaches, we will likely see market impact in both directions as candidates refine their stances on cryptocurrency.
Recall
Bitcoin was trading above $65,000 on August 2. The price began to fall sharply on Sunday, August 4. The price fell below $60,000 at around 5:15 PM, BTC was trading at $51,000 around 5:00 AM, and fell to $49,000 after 9:30 AM before partially recouping the fall.
Ethereum fell even further. Over the past day, Ether has lost about 24% in value, and over a week, more than 33%. Several cryptocurrencies from the top 100 by capitalization have lost more than 50% in value overnight.
The Ministry of Finance wrote that after the Fed's decision on the interest rate, Bitcoin fell below $64,000.
The exchange rate of Bitcoin, Ethereum, Litecoin and other cryptocurrencies
- Bitcoin Cryptocurrency
