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Over the last seven days, BTC has fallen by over 11% to see new lows of $25,000 with little to no signs of a reversal on the horizon. Alongside the steep drop in value, transaction volume for the asset class has dipped by nearly double digits to settle at $15.7 billion.
Bitcoin’s sudden decline makes it the worst week for the asset class since FTX’s collapse in November 2022. However, the change in fortune for the largest cryptocurrency was not accidental but a culmination of several factors.
Early in the week, there were unconfirmed reports of Elon Musk’s SpaceX offloading its BTC holdings valued at around $375 million. Reports of the sale triggered panic for traders as liquidations surpassed the $1 billion mark.
As Bitcoin’s price tumbled, short-term traders waded into the markets, seeking profits from the volatility following three weeks of sideways trading. Onchain analytics firm Glassnode reported that active BTC supply between one week to a month fell to a 30-day low of 680,353.0287 BTC.
Experts have pointed to other macroeconomic factors as reasons for BTC’s decline, including the bankruptcy filing of Chinese real estate giant Evergrande. Pundits aver that the implosion of the firm may have triggered a contagion effect despite China’s ban on virtual currencies with unconfirmed reports hinting that Chinese investors are relying on VPNs to trade the asset class.
In North America, U.S. Treasury yields are marching to new highs as the Feds’ interest rate hikes begin to have its effects. Yield levels are now at a 10-year high, attracting investors fleeing BTC’s turbulence, with equities recording a capital flight.
While the direction of BTC’s price remains uncertain, investors have their eyes peeled on the release of the Consumer Price Index (CPI) for August and the Personal Consumption Expenditures (PCE) numbers. Ahead of the FOMC meeting in September, it is unclear whether or not the Feds will be proceeding with additional rate hikes.
Other assets are in the red
Bitcoin dragged other digital assets underwater in its descent, leaving the markets in a sea of red.
Ethereum (ETH), the second largest cryptocurrency by market capitalization, fell by 5% while XRP lost 10.54% of its value as its case against the U.S. Securities and Exchange Commission (SEC) enters another chapter.
Dogecoin (DOGE), Solana (SO), and Shiba Inu (SHIB) recorded losses of 5.14%, 8.99%, and 5.07%, respectively, in a tragic week for virtual currencies.