Bitcoin dives to six-month low as investors flee risk-on assets amid macroeconomic uncertainty Bitcoin dives to six-month low as investors flee risk-on assets amid macroeconomic uncertainty
Bitcoin's 13% drop triggers market panic, resulting in $1 billion liquidations.
2 min read
Updated: Aug. 5, 2024 at 11:07 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Investors are fleeing perceived riskier assets like Bitcoin due to a challenging macroeconomic environment severely impacting the crypto market.
Bitcoin‘s price plunged to a six-month low of under $50,000 amid a broader crypto market sell-off that led to over $1 billion in liquidations.
The flagship digital asset lost critical support levels in the past day, extending its poor weekend performance into the Asian trading hours of Aug. 5. Bitcoin fell to as low as $49,121, marking a 13% decline within 24 hours. However, it has since rebounded to above $52,000 as of press time.
Similarly, Ethereum experienced a nearly 20% drop to $2,100, its lowest price since December 2023, amid speculation about institutional offloading.
Meanwhile, other major cryptocurrencies, excluding stablecoins, also suffered significant losses. Solana, XRP, BNB, Cardano, and Dogecoin all saw losses exceeding 15% during the reporting period.
According to CryptoSlate’s data, the asset declines resulted in the total crypto market capitalization falling by roughly 16.57% to about $1.88 trillion. This represents the market’s lowest value since February, when it was under $2 trillion.
Additionally, the sell-off resulted in $1.05 billion in liquidations. The most significant single liquidation occurred with a BTC-USD transaction worth $27 million on Huobi. Long traders, who had expected prices to rise, lost approximately $902 million, while short traders lost $153 million.
Why did crypto crash?
Market analysts attribute these sell-offs to various factors, including the macroeconomic situation, and there are speculations about a systemic market risk involving an industry player.
Arthur Hayes, co-founder of BitMEX, suggested that significant market players may be dumping their digital assets. He stated:
“My TradFi birdies are telling me somebody big got smoked and is dumping all #crypto. No idea if this is true, but let the fam know if you are hearing the same.”
Rumors earlier suggested that Tron founder Justin Sun was liquidated, but Sun has denied these claims. He stated that his firm does not engage in leveraged trading strategies because they do not benefit the market. He added:
“We prefer to engage in activities that provide greater support to the industry and entrepreneurs, such as staking, running nodes, working on projects, and helping project teams provide liquidity.”
Meanwhile, others have linked the crypto downturn to broader economic factors. Markus Thielen, founder of 10X Research, told CryptoSlate that the US economy appears weaker than initially believed. He predicts a high likelihood of a 2025 recession, with the stock market often anticipating such downturns in advance.
Thielen warned that if the stock market continues to decline, Bitcoin prices could revisit the $50,000 level and potentially drop further.
Similarly, Gracy Chen, CEO of BitGet, noted that BTC prices could continue to fall due to geopolitical tensions, concerns about the US recession, and declines in the US and Japanese stock markets.
Author 
Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
