Bitcoin, the world’s most well-known cryptocurrency, faced a significant drop, hitting a two-month low of approximately $25,400, before recovering some losses to trade around $26,800 during the morning hours in Asia. Ethereum, another major cryptocurrency, also experienced a substantial decline, falling to around $1,550 before rebounding to nearly $1,700.
This downward trend affected all the top 10 non-stablecoin cryptocurrencies as various macroeconomic factors, including the devaluation of the Chinese yuan and the financial troubles of Chinese real estate giant Evergrande, impacted investor sentiment.
Sudden liquidation caused a shake in the crypto world
The overall result was that investors liquidated more than $1 billion worth of cryptocurrencies, pushing the total market capitalization to the brink of the psychologically significant $1 trillion mark.
Among the cryptocurrencies affected, XRP, in particular, faced significant losses. This followed a U.S. judge’s decision to grant the U.S. Securities and Exchange Commission (SEC) the green light to file a motion appealing the recent favorable ruling for Ripple Labs concerning the retail sales of the XRP token.
Even as the Forkast 500 NFT index declined, there was a notable increase in transactions. Meanwhile, U.S. stock futures showed signs of stability following a lower close on Wall Street. Concerns about potential future monetary tightening grew as the minutes from the Federal Reserve’s July meeting were released.
In a span of 24 hours, Bitcoin recorded a slide of 7.02%, reaching $26,819.27 by 07:20 a.m. in Hong Kong. This translated to a weekly loss of 8.88%, based on data from CoinMarketCap. The cryptocurrency had touched a two-month low of $25,409.11 earlier on Friday.
Markus Thielen, the head of crypto research at Matrixport, a digital asset service platform, highlighted that Bitcoin’s breach of the crucial support level at $28,000 during late U.S. and early Asia trading sessions had signaled the possibility of a sharp decline.
Elon Musk’s SpaceX effect on Bitcoin
Further adding to Bitcoin’s bearish outlook, a report by The Wall Street Journal revealed that SpaceX, the rocket company founded by Elon Musk, had written down the value of its Bitcoin holdings by a total of $373 million over the past two years.
According to the recent court filing, the SEC is set to file its motion for appeal on Friday, while Ripple has until September 1 to submit its opposing papers.
Overall, the entire cryptocurrency market saw a decline of 5.69% in the past 24 hours, with the total market capitalization reaching $1.07 trillion. Trading volume also experienced a significant surge, rising by 78.91% to $60.58 billion. As the crypto market navigates these fluctuations, analysts and investors are closely observing the developments to gauge the future trajectory of digital assets.
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