Bitcoin Traders Anticipate Drop to $55K as U.S. Stocks Tumble, XRP Records Steep Declines
As markets from the U.S. to Japan face widespread declines, the ripples are significantly impacting the cryptocurrency sector.
Bitcoin, which saw a sharp drop to $62,500, is struggling amidst global market instability and geopolitical tensions in the Middle East.
Bitcoin and other major cryptocurrencies saw significant price drops due to a global stock sell-off, with Bitcoin falling to $62,500. Analysts warn that if Bitcoin's support levels fail, it could drop to $55,000.
— OctoBot Crypto News (@OctoBotNews) August 3, 2024
Market Volatility Affects Bitcoin Stability
In the early trading hours in Asia on Friday, Bitcoin managed to claw back from its recent lows, despite the ongoing global sell-off now entering its third consecutive day.
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However, Bitcoin is hovering close to its 50-day moving average—a critical support level.
Alex Kuptsikevich, a senior market analyst at FxPro, expressed concerns about Bitcoin’s trajectory.
“If the decline develops, dynamics around the $63K and $61K levels, near where the 50 and 200-day moving averages are, will be important,” Kuptsikevich stated to CoinDesk.
He further noted that breaching these support levels could potentially lead Bitcoin down to $55K, a scenario he described as “quite frightening.”
Historical Trends and Current Struggles
August’s reputation as one of the worst months for Bitcoin is backed by a 13-year trend where the currency typically suffers losses.
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Kuptsikevich highlighted that “Over the past 13 years, bitcoin has ended the month up only five times and down eight times.
The average decline was 15.4% and the average rise was 26%.”
Alongside Bitcoin, major cryptocurrencies like Ether and Solana have also experienced notable losses, with XRP and Solana’s SOL dropping by as much as 8% in the last 24 hours.
Equity Markets and Crypto Correlations
The downturn in equity markets has mirrored the declines in crypto markets. The Nasdaq 100 and the S&P 500 have seen significant losses, with the technology-heavy Nasdaq dropping 2.6% and the S&P 500 losing nearly all of its gains from the previous session.
This has led to a cautious sentiment in the broader market, affecting investor confidence across asset classes, including cryptocurrencies.
Interestingly, while U.S.-listed Bitcoin ETFs saw a total daily net inflow of $50.6 million, specific funds like GBTC and others faced outflows, underscoring the mixed reactions among investors.
As Bitcoin navigates through these turbulent financial waters, the focus remains on how it will withstand the current economic uncertainties and whether the historical downward trends of August will repeat themselves.
With major cryptocurrencies and stock indices reflecting investor apprehension, the coming weeks could be crucial for the market’s direction.
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