The cryptocurrency market faced significant volatility this past week, with Bitcoin experiencing a steep drop of ten thousand dollars from Monday to Sunday morning. The dramatic fluctuation in prices can be largely attributed to factors stemming from the United States.
At the beginning of the week, Bitcoin’s price surged by three thousand dollars on Monday, reaching $70,000 for the first time since early June. This uptick was propelled by Donald Trump’s appearance at the 2024 BTC conference, where he made bullish remarks about Bitcoin and crypto. However, the positive momentum was short-lived as Bitcoin tumbled by four thousand dollars later that day.
The crypto market experienced further pressure as the US released its July jobs report, indicating a rise in the unemployment rate to 4.3%, the highest since October 2021. This data signaled potential economic concerns, prompting immediate price declines in both traditional markets like Wall Street and the cryptocurrency market.
Central Bank Policies and Market Response
The Bank of England’s decision to lower interest rates by 0.25 basis points marked the first cut since the pandemic, aligning with similar moves by institutions like the ECB and the Bank of Canada. However, the US Federal Reserve has yet to follow suit, maintaining interest rates at a multi-decade peak between 5.25% to 5.50%.
Uncertainty Surrounding the Federal Reserve
The uncertainty regarding the Federal Reserve’s next move has created a sense of unease among investors, particularly larger ones who utilize ETFs for exposure to the crypto market. Calls for Fed Chair Jerome Powell to act swiftly and cut rates sooner rather than later have intensified, adding another layer of uncertainty to the market.
Investor Response and ETF Outflows
Reports of a weakening US economy and the indecision of the Federal Reserve have prompted some investors to exit the crypto market temporarily. This sentiment was reflected in the significant outflows from spot Bitcoin ETFs, reaching almost $240 million on Friday. The withdrawals from Ethereum ETFs also persisted in the negative territory for a second consecutive week, indicating a broader trend of investor caution.
The recent turbulence in the cryptocurrency market can be largely attributed to factors related to the US economy and the Federal Reserve’s policy decisions. As investors navigate through uncertain times, the market’s response to economic data and central bank actions will continue to shape the trajectory of cryptocurrencies like Bitcoin in the coming weeks.