Bitcoin sinks below $54K

Bitcoin has dropped by 12% for the day and more than 20% for the week

Olumide Adesina•Monday, August 5, 2024•2 min read

Bitcoin lost the $55K support level in the early hours of Monday. A dip under that level led to mass liquidation in the derivatives market. Coinglass data shows over $800 million in derivatives positions were liquidated in the crypto market for the day.

A widespread cryptocurrency selloff intensified in the early hours of Monday, sending ether, back to December-low pricing and bitcoin (BTC) to depths not seen since February.

Bitcoin has dropped by 12% for the day and lost more than 20% for the week. With ether (ETH) down 21% over the last day and 30% over the past week, the cryptocurrency has lost all of its gains this year and is down about 3% since January 1.
Appetite for risk moderated in the broader market. The Bank of Japan may have offset the current big fall in traditional and cryptocurrency markets when it raised its benchmark interest rate last week.

The country’s Nikkei stock index plummeted due to the monetary tightening. The Nikkei is currently down by over 15% over the last three sessions and 20% from a mid-July top, after falling another 6% early on Monday.

The Nasdaq fell more than 5% in the last two sessions of last week as the activity in Japan extended to the United States. Sunday night action has seen a 2.5 percent decline in Nasdaq futures.

A few were taken aback not only by the Bank of Japan’s rather surprising hawkishness last week but also by the U.S. Federal Reserve’s decision to seem hesitant about lowering rates in September, something almost everyone in the market had believed would happen.

The rates are at a multi-decade high of 5.25% to 5.50% while the US Federal Reserve continues to delay such a move. But Democratic Senator Elizabeth Warren pressured Fed Chair Jerome Powell to scrap his holiday plans and lower interest rates immediately rather than waiting until September when most analysts predict the move will occur.

Lower interest rates are typically seen as positive for riskier assets like cryptocurrencies. Because of this, some investors may have chosen to exit the cryptocurrency market due to uncertainty about the Fed’s next move.

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ABOUT THE AUTHOR See More

Olumide Adesina

Financial Market Writer

Olumide Adesina is a French-born Nigerian financial writer. He tracks, analyzes, and reports changes in financial markets with over 15 years of working experience in investment trading.