Bitcoin Tests $56,000 Level Amid Market Volatility

In the early hours of Wednesday, September 4, the price of the leading cryptocurrency fell to a four-week low of $56,000.

At the time of writing, Bitcoin is trading at $56,470, having lost 4.3% over the past 24 hours. Ethereum’s daily decline stands at 5.7%, with a price of $2380.

Among the top 10 cryptocurrencies by market capitalization, Solana (-4.5%) and Lido Staked Ether (-5.6%) show comparable declines, according to CoinGecko.

According to Coinglass, the total volume of liquidated positions over the past day amounted to $197.7 million, with $171.5 million in long positions.

The Fear and Greed Index increased to 27, indicating a rise in bearish sentiment. The previous day, the index stood at 26 points.

The negative sentiment in the cryptocurrency market may have been triggered by a drop in Asian stock indices following a 2.1% decline in the US S&P 500 on Tuesday.

On the previous day, the US manufacturing activity index was released, remaining in recession territory for the fifth consecutive month at 47.2 points, compared to 46.8 points previously and a forecast of 47.5 points.

On September 3, the net outflow from spot Bitcoin ETFs amounted to $287.7 million, according to SoSoValue. This negative figure was the third largest in history.

The main reason was the withdrawal of funds by Fidelity clients from FBTC ($162.3 million). Investors withdrew $50.4 million from Grayscale’s GBTC, $33.6 million from ARKB by ARK Invest and 21Shares, and $25 million from BITB by Bitwise.

CryptoQuant noted an inflow of liquidity into USDT.

Liquidity is growing in the crypto market, but it has not yet been allocated

“Much of the capital that is being allocated to stablecoins remains without providing buying pressure on the order books, but this “firepower” could reach the market at any time.” – By @caueconomy… pic.twitter.com/U2zFGJzxQI

— CryptoQuant.com (@cryptoquant_com) September 3, 2024

“Much of the capital directed into stablecoins has yet to manifest in the order book, but this ‘firepower’ could enter the market at any moment,” experts noted.

Former BitMEX CEO Arthur Hayes attributed Bitcoin’s decline to a liquidity shortage.

Previously, QCP Capital suggested buying digital gold during corrections in September, with a view to taking profits in October or towards the end of the year, considering its seasonality.