Cryptocurrency prices fell sharply on Thursday afternoon during U.S. trading hours, with bitcoin dropping nearly 3% to $57,700, its lowest level since the early August market panic. Other major cryptocurrencies like ether (ETH) and solana (SOL) saw even steeper declines, contributing to a 3% drop in the CoinDesk 20 Index over the past 24 hours.
The abrupt selloff came without an obvious catalyst, contrasting with two earlier panics this summer. The first, around July 4, was triggered by news that the German government planned to sell 50,000 seized bitcoins. The second occurred two weeks ago when a Bank of Japan rate hike led to a global market plunge that included cryptocurrencies.
Interestingly, this latest decline comes amid a surge in U.S. equity markets, with the Nasdaq and S&P 500 both rallying back to pre-August levels. Bulls might be frustrated as positive factors like the ongoing stock market rally and the expected U.S. Federal Reserve rate cuts haven’t translated into gains for crypto.
Additionally, institutional adoption of bitcoin is on the rise. Recent 13F filings show that the number of institutional holders of spot bitcoin ETFs increased to 1,924 by the end of June, up from 1,479 in the first quarter. Publicly traded companies are also boosting their bitcoin holdings, with Marathon Digital raising $300 million to buy over 4,000 bitcoins, and Semler Scientific planning a $150 million capital raise to add more tokens to its treasury.
Despite these positive developments, the crypto market remains under pressure, leaving investors puzzled by the disconnect between market fundamentals and price action.
Bitcoin dropped to its lowest level since early August during U.S. trading hours on Thursday, falling nearly 3% to $57,700. This decline extended to other major cryptocurrencies like ether (ETH) and solana (SOL), causing a broader market pullback, with the CoinDesk 20 Index down 3% over the past 24 hours.
Summer 2024 has already seen two significant selloffs. The first occurred around July 4, sparked by news that the German government planned to liquidate 50,000 bitcoins seized in a criminal probe. The second took place two weeks ago when a seemingly routine rate hike by the Bank of Japan triggered a global selloff in equities that spilled over into crypto markets.
Today’s selloff appears to lack a clear catalyst. Notably, U.S. equity markets were performing well, with the Nasdaq up 2.4% and the S&P 500 rising 1.6%, returning to levels seen before the early August downturn.
This has left bulls frustrated as positive market signals have failed to boost crypto prices. One key factor is the nearly certain expectation of a U.S. Federal Reserve rate cut in September, a scenario that historically has been favorable for crypto assets. However, prices have remained unresponsive.
Another positive indicator is the growing institutional adoption of bitcoin. The latest 13F filings, which cover the second quarter of 2024, show that 1,924 institutional investors now hold spot bitcoin ETFs, up from 1,479 in the first quarter, according to ETF Store President Nate Geraci. This increase occurred despite a price decline between April and June.
Public companies are also continuing to increase their bitcoin holdings. Marathon Digital, a major bitcoin miner, raised $300 million in convertible debt this week, immediately using the funds to purchase more than 4,000 bitcoins at around $59,000 each. Additionally, Semler Scientific, which had previously announced plans to add bitcoin to its treasury, received SEC approval this week to raise over $150 million, which will be used to buy more tokens.
Despite these developments, the crypto market’s recent price action suggests that investors are still wary, choosing to take profits rather than hold onto assets in the face of ongoing market uncertainty.
