The emerging turmoil in the stock market also affected the crypto markets. Strong corrections in bitcoin and especially in the altcoin sector peaked mainly over the weekend.
A struggling Japanese stock market, weak ISM data and US unemployment figures, combined with disappointing quarterly results from Intel and Amazon, caused the stock markets to crash at the end of the week. The 10-year Treasury yield fell about 40 basis points this week, reflecting the growing consensus for a first rate cut at the Fed's September meeting. The weak start to the week again indicates that many market participants fear that the Fed may not be able to keep up with its interest rate policy.
Bitcoin Unable to Escape the Downward Trend
At the beginning of the week, bitcoin was trading at $70,000. Thanks to Trump's speech on Saturday, it approached its all-time high, but came under increasing pressure in the second half of the week. On Friday, as the Nasdaq fell sharply, Bitcoin was unable to hold its ground and closed with a daily loss of 6%, just above $61,000. Although bitcoin has been able to decouple itself from these influences at various points in the year, this time it was affected by macroeconomic factors that led to a downturn in traditional markets.
The selling pressure was exacerbated by the withdrawal of approximately $240 million from U.S. ETFs on Friday. The selling pressure continued over the weekend, leading to a cascade of liquidations that saw the largest cryptocurrency temporarily fall below $50,000 on Monday morning.
Wave of liquidation hits altcoins hard
The correction intensified over the weekend due to forced liquidation of leveraged positions. This led to over $1 billion in liquidations on centralized exchanges in the last 24 hours alone.
The correction was particularly pronounced among altcoins. In addition to Bitcoin, which corrected by around 25% on a weekly basis, well-known names also suffered significant losses in the high double-digit percentage range, including ETH (-32%), Solana (-40%), Cardano (-30%), Avalanche (-36%), Chainlink (-36%) and NEAR (-40%), to name just a few.
Medium-term opportunities: Bitcoin Whales and Halving Cycle as Bright Spots
In the short term, a lot of damage seems to have been done. The leveraged and weak hands are currently out of the market. The fundamentals are shaken but not destroyed. While it is difficult to see the positives in weeks like these, investors with a medium-term horizon can still see encouraging signs. Bitcoin whales with more than 1,000 Bitcoins per wallet still seem to be buying. The bitcoin halving that took place in April has historically led to significant price gains in the following months, and may do so again this year.
Finally, the FTX liquidation repayments of approximately $15 billion will be distributed to creditors this year. It is expected that a significant portion of these funds will flow back into crypto assets.
