Bitcoin Faces Significant Decline Amid Economic Turmoil

Bitcoin
(BTC)
has
experienced
a
significant
price
decline,
dropping
11
percent
over
the
past
week
and
reaching
a
low
of
$49,130,
according
to
Bitfinex
Alpha.
This
marks
the
lowest
price
since
February
14th.
The
downward
momentum
accelerated
on
August
2nd
with
a
6.01
percent
daily
decline,
the
largest
since
April
2nd,
leading
to
a
total
14.52
percent
peak-to-trough
drop.
Altcoins,
particularly
Solana
(SOL),
saw
even
larger
declines.

Market
Instability
and
Liquidations

Bitcoin
failed
to
hold
key
support
at
$65,580,
suggesting
the
potential
for
further
declines.
Liquidations
totaled
$1.16
billion
in
the
last
24
hours,
primarily
affecting
long
positions.
Despite
the
bearish
market
sentiment
and
significant
declines
in
Japanese
and
US
stock
markets,
the
price
is
expected
to
have
a
small
move
upwards
towards
the
$55,000
region.
However,
the
general
market
trajectory
will
depend
on
macroeconomic
factors.

Economic
and
Political
Developments

The
broader
market
instability,
influenced
by
economic
and
political
developments,
is
impacting
cryptocurrencies
and
traditional
financial
markets.
The
recent
turmoil
in
the
Japanese
stock
market
and
losses
on
Wall
Street
highlight
the
interconnectedness
of
global
markets.
BTC’s
correlation
with
traditional
financial
markets
is
increasing,
suggesting
continued
downward
pressure
if
stock
market
declines
persist.

Meanwhile,
the
US
labor
market
showed
clear
signs
of
slowing
down,
as
the
unemployment
rate
rose
to
4.3
percent,
up
from
a
record
low
of
3.4
percent
in
April
2023.
This
increase
marks
the
highest
unemployment
rate
since
October
2021.
Job
growth
decelerated
notably,
with
only
114,000
new
positions
added
during
the
month.
Despite
these
signs
of
a
cooling
market,
the
June
job
openings
report
indicated
a
modest
decline,
with
the
previous
month’s
data
revisions
suggesting
a
steady
yet
not
alarming
slowdown.

Federal
Reserve’s
Stance

Amid
these
labor
market
concerns,
the
Federal
Open
Market
Committee
(FOMC)
opted
to
keep
the
federal
funds
rate
steady
within
the
range
of
5.25
to
5.5
percent
on
July
31st,
hinting
at
a
potential
shift
towards
easing
its
restrictive
monetary
stance.
Adding
a
positive
note
to
the
economic
narrative,
the
second
quarter
saw
a
surge
in
labor
productivity,
underscoring
continued
economic
strength
and
resilience
despite
the
challenges
in
the
labor
market.

Crypto-Sphere
Updates

In
the
latest
news
from
the
crypto-sphere,
Genesis
Global
has
completed
its
restructuring
and
begun
repaying
around
$4
billion
in
digital
assets
and
US
dollars
to
creditors
following
its
January
2023
bankruptcy.
Bitcoin
creditors
will
recover
51.28
percent,
Ethereum
creditors
65.87
percent,
and
Solana
creditors
29.58
percent,
while
those
owed
stablecoins
or
US
dollars
will
receive
full
repayment.

Meanwhile,
MicroStrategy
expanded
its
Bitcoin
holdings
by
acquiring
12,222
bitcoins
for
$805.2
million
in
Q2
and
introduced
a
new
KPI
called
BTC
yield
to
assess
its
Bitcoin
strategy’s
performance.
Despite
positive
growth
in
software
subscriptions
and
global
Bitcoin
adoption,
MicroStrategy
reported
a
significant
quarterly
loss,
missing
revenue
and
earnings
expectations.

In
contrast,
Tether
reported
a
record
net
profit
of
$5.2
billion
for
the
first
half
of
2024,
with
a
net
operating
profit
of
$1.3
billion
in
Q2,
driven
by
yield-bearing
investments
and
reserves.
As
of
June
30,
2024,
Tether’s
reserves
for
tokens
in
circulation
totaled
$118.4
billion,
with
liabilities
at
$113.1
billion,
resulting
in
a
$5.3
billion
surplus.

For
more
details,
visit
the

Bitfinex
Alpha.

Image
source:
Shutterstock