Bitcoin experienced a significant decline, falling more than 10% at its lowest point before recovering slightly to $54,333 as of 9:17 a.m. in Singapore on Monday. The digital currency’s recent drop of 13.1% over the past week marks its steepest weekly loss since the collapse of the FTX exchange in 2022. Other cryptocurrencies, including Ether and Dogecoin, also faced substantial losses.
The downturn in Bitcoin is part of a broader global market selloff, driven by increased risk aversion. Investors are grappling with economic uncertainties and doubts about whether the substantial investments in artificial intelligence will meet expectations. Additionally, rising geopolitical tensions in the Middle East are exacerbating market nervousness.
On August 2, Bitcoin exchange-traded funds in the US experienced their largest outflows in about three months. Bitcoin has also fallen below its 200-day moving average, a technical indicator suggesting a potential for further decline, with market analyst Tony Sycamore of IG Australia Pty predicting a possible drop towards $54,000.
Since reaching an all-time high of $73,798 in March, Bitcoin has been influenced by various factors, including shifting political dynamics in the US. The presidential race between pro-crypto Republican Donald Trump and Democratic candidate Vice President Kamala Harris—whose digital asset policies remain unclear—has contributed to market volatility.
Other concerns include the potential sale of government-seized Bitcoin and the risk of an oversupply of tokens returned through bankruptcy proceedings.
Amid these challenges, bond traders are increasing their bets on US interest-rate cuts starting in September, which could support economic growth and potentially benefit cryptocurrencies, according to Sean Farrell, head of digital asset strategy at Fundstrat Global Advisors LLC.
Year-to-date, Bitcoin has risen approximately 25%, in contrast to an 18% increase in gold and a 9% rise in global stock indices.
