Bitcoin experiences over 7% decrease in prices, Coinmarketcap website discloses
Bitcoin prices have experienced a significant decline of more than 7 percent within the last 24 hours, and a substantial drop of nearly 12 percent over the past week, according to data from Coinmarketcap. This downward trend has also affected other major cryptocurrencies, although to a lesser extent. Ethereum, the second largest cryptocurrency in terms of market capitalization, has witnessed a decline of around 10 percent in the past week.
As a result of these declines, the entire cryptocurrency market has experienced a 5.7 percent decrease in value over the last 24 hours. Moreover, trading volumes have surged, increasing by almost 80 percent during the same period.
This recent drop in Bitcoin’s price represents the largest one-day fall since November 2022. During that time, the collapse of the prominent exchange FTX had a significant impact on the crypto markets, leading to widespread concerns and fears.
Unlike the previous incident, there seems to be no obvious connection to specific events within the cryptocurrency market this time around. Investors appear to be more concerned about the overall state of the economy, as traditional assets have also been affected by recent declines.
The decline in the price of Bitcoin and the wider financial market can be attributed to a variety of factors. Wall Street’s main indices have been falling consistently for four consecutive sessions, primarily driven by the underperformance of major growth stocks. The resilient nature of the US economy has raised concerns about the possibility of interest rates remaining higher for an extended period of time.
Investors have adjusted their expectations of potential rate cuts, leading to an increase in government bond yields. In fact, the 10-year Treasury note reached a ten-month high of 4.328 percent in the previous session, approaching levels not seen since 2007.
The rise in Treasury yields has fueled a more risk-averse sentiment among investors, causing them to reassess their investment strategies. Many believe that the current economic data, which have surpassed expectations, indicate that the Federal Reserve may not be restrictive enough in its monetary policy.
Market traders are now anticipating that the Fed will maintain its current interest rate levels at its September meeting, with a probability of approximately 91 percent, according to the CME Group’s FedWatch tool.
Furthermore, the recent declines in the stock market have affected rate-sensitive technology and growth stocks. Companies such as Apple, Microsoft, Tesla, and Nvidia have experienced declines ranging from 0.7 percent to 2.8 percent, despite a temporary respite in Treasury yields.
The communication services and technology sectors, which house major growth stocks, have also declined by 1.6 percent and 1.0 percent respectively.
The tech-heavy Nasdaq index has reached its lowest point in over two months and is on track to experience the largest weekly decline among the three major stock indices, with a drop of 3 percent thus far.
The CBOE volatility index, often referred to as the “fear index,” has surged to its highest level in nearly three months, reflecting the increasing anxiety among investors.