The crypto market plunged to three-week lows, with Bitcoin dropping below $60,000 on Sunday for the first time since July 13, according to analysts.
Bitcoin lost 10% of its value during weekend trading, falling to just below $55,000, as reported by CoinGecko. Total liquidations in the past 24 hours surged to $620 million, with longs accounting for 90% of the losses, according to CoinGlass.
Rich Rosenblum, co-founder of trading firm GSR, told Decrypt that a combination of factors is driving the market volatility. “Uncertainty surrounding the U.S. election, interest rate fluctuations, and potential instability in the Middle East are collectively causing concern among investors,” he said.
“Most signals point to crypto entering a second phase of the bull market,” Rosenblum added. “Yet, if there’s a macro or geopolitical collapse similar to March 2020, we’re likely to see crypto take the brunt of it, as it’s not a high conviction play for many of the ‘tourists’ who entered the market in the past year.”
If such a collapse occurs, it could present a significant buying opportunity. Rosenblum noted that worsening macroeconomic conditions typically lead to increased money printing, which can make assets like Bitcoin more attractive to investors.
Over the weekend, the cryptocurrency market faced additional pressure, with major assets like Bitcoin, Ethereum, and Solana experiencing further declines. Bitcoin fell nearly 6% over the last 24 hours, dipping below the $58,000 mark and pushing its seven-day drop to almost 16%. Sitting as high as nearly $70,000 one week ago, Bitcoin is currently priced at $57,388, according to CoinGecko.
Increased money printing generally leads to inflation by stimulating borrowing through various programs, including open market operations and quantitative easing, making assets like Bitcoin more attractive to investors.
“Whether it’s to revive a job market that’s mostly added to government payrolls and part-time jobs, to fund an expensive military, or to implement ill-conceived plans to fight inflation, the worse things get, the more Bitcoin will eventually gain value when monetary policy runs amok again,” Rosenblum said.
Former President Donald Trump’s path to a White House victory in November has been complicated following President Joe Biden’s decision to bow out of the race last month and endorse Vice President Kamala Harris.
Harris appears to be gaining in the polls, with voters preferring the vice president over Trump by a margin of 1% nationally, according to a recent CBS News Poll. In key battleground states, Harris is running neck and neck with Trump.
Uncertainty over a clear winner and insights into which U.S. policies will be implemented next year comes as geopolitical tensions rise in the Middle East. Israel is preparing for potential attacks by Iran and Hezbollah this week, with assaults expected from several fronts, local media reported Sunday.
Flaring tensions in the Middle East threaten to escalate into a larger conflict, which could disrupt trade in the region and wreak havoc on both domestic and global markets, Decrypt reported.
“Crypto can sell off over weekends like this as it’s the only thing that can be sold,” Ryan McMillin, chief investment officer at crypto fund manager Merkle Tree Capital, told Decrypt.
Despite the current headwinds, McMillin said the worst might be over. “It’s actually not too bad to find Bitcoin at the bottom of its five-month-long range,” he said.
Credit: Decrypt (Text Excluding Headline)
