Bitcoin Plunges Below $54,000 as Fed Rate Cut Expectations and Outflows WeighBitcoin prices have plummeted again, falling more than 4% and breaking below $54,000. The second-largest cryptocurrency, Ethereum, has seen an even steeper decline, falling over 6%
Bitcoin Plunges Below $54,000 as Fed Rate Cut Expectations and Outflows Weigh
Bitcoin prices have plummeted again, falling more than 4% and breaking below $54,000. The second-largest cryptocurrency, Ethereum, has seen an even steeper decline, falling over 6%. Over the past 24 hours, more than 86,000 traders have been liquidated in the crypto market.
Beyond rising expectations for a Fed rate cut, outflows have become the final straw for this downward trend.
Friday's release of August non-farm payroll data revealed a slowdown in the US labor market, paving the way for a rate cut by the Fed later this month. Data showed that US non-farm payrolls increased by 142,000 in August, below expectations, while the unemployment rate edged down to 4.2%, its first decline in five months. Following the data release, Fed officials have made statements suggesting their support for a rate cut.
Christopher Waller, a member of the Federal Open Market Committee (FOMC), stated that the labor market is continuing to soften, but not in a worsening manner, a crucial indicator for the Fed's upcoming decision. While Waller didn't explicitly mention the rate cut magnitude, he hinted at a preference for a 25-basis point reduction first. John Williams, president of the Federal Reserve Bank of New York, also expressed the need for easing monetary policy but didn't comment on the rate cut scale.
The Fed's loose monetary policy is often considered beneficial to speculative assets like cryptocurrencies. Earlier this year, Bitcoin prices surged on the influx of spot Bitcoin Exchange Traded Funds (ETFs) in the US, forming a new bull market. However, this upward trend did not sustain, and investors began withdrawing funds from Bitcoin ETFs, causing the price to decline.
According to Sosovalue, 12 spot Bitcoin ETFs, including BlackRock's IBIT and Fidelity's FBTC, have experienced net outflows for five consecutive trading days, totaling over $765 million. Prior to this, all spot Bitcoin ETFs had seen eight consecutive days of net inflows, totaling $753 million. The 5-day outflow volume has already surpassed the previous continuous inflow volume.
It's noteworthy that on September 3rd, the 12 ETFs saw a combined net outflow of $287.8 million, marking the largest single-day outflow in the past four months. Fidelity's FBTC led the outflow with $162.3 million. Grayscale's GBTC saw $50.4 million in outflows, while Bitwise's BITB and Cathie Wood's ARKB saw outflows of $25 million and $33.6 million respectively.
Outflows have become the final straw in crushing Bitcoin prices. As expectations for a Fed rate cut rise, investor confidence in risk assets is waning, leading them to withdraw funds, resulting in a significant crash in Bitcoin prices. The future trajectory of Bitcoin prices will depend on the Fed's monetary policy direction and investor sentiment towards the cryptocurrency market.
(This article is for informational purposes only and does not constitute investment advice.)
(Content compiled by Daily Economic News, China Securities Journal, and public data.)
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