The cryptocurrency market experienced a significant downturn in the past 24 hours, with Bitcoin (BTC) leading the losses by slipping over 4% to trade near the $58,000 level. This decline has had a ripple effect across other major tokens, including Ether (ETH), Solana’s (SOL), Cardano’s (ADA), BNB Chain’s (BNB), and Ripple’s XRP ((XRP)), which have all fared slightly better with losses ranging from 2.5% to 3.8%.
Market Reaction to U.S. CPI Data
The decline in Bitcoin price came after the release of the latest July U.S. consumer price index (CPI) figures, which showed a year-on-year increase of 2.9%. While this was expected and marks the first time since 2021 that it has fallen below 3%, the market’s reaction was lukewarm at best. Despite the NASDAQ and S&P 500 reversing an early sell-off and ending the day in the green, BTC continued its sell-off after the CPI print.
Why Crypto Prices are Highly Sensitive to U.S. Economic Data
According to K33 Research, crypto prices have been "highly sensitive" to U.S. economic data in recent months. This sensitivity can be attributed to investors’ preference for stability over riskier assets. As a result, some traders expect BTC prices to drop to as low as $55,000 in the near term before potentially rebounding.
Traders Expect Further Losses
Alex Kuptsikevich, FxPro’s senior market analyst, shared his thoughts on the matter: "A new sell-off momentum is still the prevailing scenario, with a potential pullback to $55K." He also mentioned that data supporting the Fed’s imminent easing of monetary policy may encourage bulls to overcome the short-term downtrend and give the green light for prices to rise to $66K.
U.S.-Listed Spot Bitcoin ETFs Record Net Outflows
In a separate development, U.S.-listed spot bitcoin exchange-traded funds (ETFs) recorded $81 million in net outflows on Wednesday. Grayscale’s GBTC was the most affected, with $56 million in outflows. Fidelity’s FBTC also saw significant outflows of $18 million. Ark Invest’s ARKB and Bitwise’s BITB lost $6.7 million and $5.7 million respectively.
Ether ETFs Faring Better
In contrast to the Bitcoin ETFs, Ether ETFs fared better with $10 million in net inflows on Wednesday. This marks a third consecutive day of inflows for these products. BlackRock’s ETHA recorded $16 million in inflows, while Grayscale’s ETHE lost $16 million.
Bitcoin and Ether Price Performance
Here is a summary of the price performance of Bitcoin and other major tokens:
- Bitcoin (BTC): Slipped over 4% to trade near the $58,000 level
- Ether (ETH): Fell 3.8%
- Solana’s (SOL): Dropped 2.5%
- Cardano’s (ADA): Lost 2.5%
- BNB Chain’s (BNB): Fared slightly better with a 2.5% loss
- Ripple’s XRP ((XRP)): Also dropped 2.5%
Conclusion
The cryptocurrency market experienced a broad-based decline in the past 24 hours, with Bitcoin leading the losses by slipping over 4%. The release of U.S. CPI data may have contributed to this decline, as investors continue to seek stability over riskier assets.
Investors Expect Further Losses
- Alex Kuptsikevich: "A new sell-off momentum is still the prevailing scenario, with a potential pullback to $55K."
- Data supporting the Fed’s imminent easing of monetary policy may encourage bulls to overcome the short-term downtrend and give the green light for prices to rise to $66K.
Bitcoin ETFs Record Net Outflows
- U.S.-listed spot bitcoin exchange-traded funds (ETFs) recorded $81 million in net outflows on Wednesday
- Grayscale’s GBTC was the most affected, with $56 million in outflows
Ether ETFs Faring Better
- Ether ETFs fared better with $10 million in net inflows on Wednesday
- BlackRock’s ETHA recorded $16 million in inflows
Market Reaction to U.S. CPI Data
- The release of the latest July U.S. consumer price index (CPI) figures showed a year-on-year increase of 2.9%
- Despite this, the market’s reaction was lukewarm at best
Conclusion
The cryptocurrency market experienced a broad-based decline in the past 24 hours, with Bitcoin leading the losses by slipping over 4%. The release of U.S. CPI data may have contributed to this decline, as investors continue to seek stability over riskier assets.
- Investors expect further losses
- Bitcoin ETFs record net outflows
- Ether ETFs fare better
Recommendations for Investors
As the market continues to be sensitive to U.S. economic data, it is essential for investors to remain cautious and adjust their portfolios accordingly. Some potential recommendations for investors include:
- Diversify your portfolio: Spread investments across various asset classes to minimize risk
- Monitor economic data: Keep a close eye on U.S. CPI and other economic indicators that may impact the market
- Adjust investment strategy: Consider adjusting investment strategies in response to changing market conditions
By following these recommendations, investors can better navigate the complex cryptocurrency market and make informed decisions about their investments.
