TLDR
Bitcoin price dropped from $65,500 to around $64,000 in early Asian trading hours.
Over $250 million in bullish bets were liquidated, the largest amount since early July.
Ethereum saw a larger drop of about 7.5-8.5% amid outflows from the new ETH ETF.
The crypto selloff followed a major decline in US tech stocks and spread to Asian markets.
Bitcoin’s correlation with global stocks has become unusually negative recently.
The cryptocurrency market experienced significant turbulence on Thursday, July 25, 2024, as prices of major digital assets fell sharply.
This downturn came in the wake of a broader selloff in global equity markets, particularly affecting US technology stocks.
Bitcoin, the largest cryptocurrency by market value, saw its price drop from over $65,500 to around $64,000 within minutes during early Asian trading hours.
This represents a decline of about 3%. The sudden price movement led to the liquidation of over $250 million in bullish bets, marking the largest such event since early July.
Ethereum, the second-largest cryptocurrency, faced an even steeper decline. Its price fell by approximately 7.5-8.5%, a move that some analysts attribute to outflows from the newly launched Ethereum ETF.
The Grayscale Ethereum ETF (ETHE) saw outflows of more than $811 million, reducing its assets under management to less than $8 billion.
The cryptocurrency market’s downturn appears to be closely linked to movements in the traditional financial markets. On Wednesday, July 24, Wall Street experienced its worst trading day since 2022.
The tech-heavy Nasdaq 100 index lost 660 points, with major technology companies like Alphabet (Google’s parent company) and Tesla seeing significant drops in their stock prices.
The effects of this US market decline spread to Asian markets early Thursday. Japan’s Nikkei 225 index slumped more than 3%, while the MSCI Asia Pacific Index dropped by 1.5%.
Market analysts suggest that these movements reflect a broader reassessment of the artificial intelligence sector and persistent worries about consumer demand in the US.
Bitcoin’s relationship with global stocks has shown an unusual pattern recently. The 30-day correlation coefficient between Bitcoin and the MSCI index of global shares has approached minus 0.20. This indicates that Bitcoin and global stocks are moving in opposite directions, a rare occurrence since 2020.
Despite the recent drop, Bitcoin has still performed well in 2024, with a year-to-date gain of about 51%. This growth has been partly driven by strong demand for US-based Bitcoin exchange-traded funds (ETFs).
The crypto market’s reaction to global economic trends highlights its increasing integration with traditional financial markets.
As digital assets become more mainstream, they appear to be more susceptible to the same factors that influence stocks and other conventional investments.
