Overnight on August 5, the leading cryptocurrency plummeted nearly 13%. Briefly, the coin dropped to $49,000.
At the time of writing, digital gold has slightly recovered and is trading at $52,700.
According to CoinGecko, its market capitalization is approximately $1 trillion. The total cryptocurrency market cap has fallen to $1.88 trillion.
Following Bitcoin, other top-10 digital assets entered the “red zone.” Ethereum decreased by 22%, falling below $2,300.
Solana dropped below $120 (-39%), BNB is trading at $430 (-29%), and TON is around $5.1 (-25%).
According to Coinglass, the volume of liquidations over the past 24 hours reached $1.05 billion, with $902 million in long positions.
What is Happening with Bitcoin?
The ongoing correction likely stems from last week’s slump in the US stock market, triggered by Middle East tensions.
CryptoQuant analysts noted the loss of the $57,000 resistance level and did not rule out a further drop to $40,000.
#Bitcoin dropped over 16% in the last 24 hours, breaking below the $57K support level.
This breach suggests a possible drop to $40K.
Currently, traders are facing their most negative unrealized profit margins since November 2022. pic.twitter.com/gTWT52NO60
— CryptoQuant.com (@cryptoquant_com) August 5, 2024
“Currently, traders are facing their most negative unrealized profit margins since November 2022,” experts added.
MN Trading founder Michaël van de Poppe stated that such days “typically define the low or the start of a big crisis.”
These days typically define the low or the start of a big crisis.
It’s binary.
Either V-Shape back up and it’s going to rotate towards $BTC as safe haven alongside Gold & $ETH taking over with DeFi as the safe haven for banking systems.
I think we’re rolling into that.
— Michaël van de Poppe (@CryptoMichNL) August 5, 2024
“Either V-Shape back up and it’s going to rotate towards Bitcoin as a safe haven alongside gold and Ethereum, which will take over, and DeFi will become the safe haven for banking systems. I think we’re rolling into that,” he wrote.
There is also speculation about the possible involvement of market maker Jump Crypto in the market dump. On August 4, the company unlocked 120,000 wETH in Lido and has sold most of it by now, negatively impacting the second-largest cryptocurrency by market cap.
My TradFi birdies are telling me somebody big got smoked, and is dumping all #crypto. No idea if this is true, I won’t name names, but let the fam know if you are hearing the same?????
— Arthur Hayes (@CryptoHayes) August 5, 2024
“My TradFi birdies are telling me that somebody big got smoked and is dumping all the cryptocurrency. I have no idea if this is true. I won’t name names, but let the fam know if you are hearing the same,” noted former BitMEX CEO Arthur Hayes.
Euro Pacific Capital President Peter Schiff did not miss the opportunity to mock the market. According to him, many Bitcoin investors are “in denial.”
Based on the comments on my posts, #Bitcoin #HODlers are in denial. You guys are whistling past a #crypto graveyard. Don’t say I didn’t warn you.
— Peter Schiff (@PeterSchiff) August 4, 2024
“You guys are whistling past a crypto graveyard. Don’t say I didn’t warn you,” he stated.
The market continues to be negatively affected by the potential sale of Mt.Gox assets. However, Glassnode believes that most recipients of the funds are hodlers, which could potentially ease the pressure in the coming weeks.
Negative market sentiment could also be influenced by weak dynamics of spot Ethereum ETFs and changes in the US presidential race.
QCP Capital anticipates more significant price fluctuations for Ethereum, with the monthly volatility premium for “far” options increasing from 4% to 8%.
Previously, BRN analyst Valentin Fournier stated that companies mining the first cryptocurrency have likely begun a new phase of coin accumulation.