Crypto Market Plunges: Bitcoin Falls Below $53,000, Ethereum Erases Year-to-Date Gains

Crypto Market Plunges: Bitcoin Falls Below $53,000, Ethereum Erases Year-to-Date GainsOn Monday, August 5th, Beijing time, the cryptocurrency market experienced a massive sell-off, with Bitcoin and Ethereum plummeting sharply, triggering panic in the market.Bitcoin, the largest cryptocurrency asset, fell nearly 13% in the week ending August 4th, marking its largest weekly decline since the FTX exchange collapsed in 2022

Crypto Market Plunges: Bitcoin Falls Below $53,000, Ethereum Erases Year-to-Date Gains

On Monday, August 5th, Beijing time, the cryptocurrency market experienced a massive sell-off, with Bitcoin and Ethereum plummeting sharply, triggering panic in the market.

Bitcoin, the largest cryptocurrency asset, fell nearly 13% in the week ending August 4th, marking its largest weekly decline since the FTX exchange collapsed in 2022. Early on August 5th, Bitcoin dipped to a low of $52,410, down as much as 14.68%. By the time of writing, it was trading at $53,706.

U.S.-listed crypto stocks also suffered heavy losses, with CleanSpark falling over 20%, MicroStrategy and Marathon Digital dropping over 16%, Coinbase and Riot Platforms declining over 13%.

Ethereum, the worlds second-largest cryptocurrency, also experienced a major sell-off early this morning, briefly falling below $2,100, hitting a low of $2,084. At the time of writing, it has slightly recovered to around $2,300, but has wiped out all gains since February this year.

Since the approval of spot ETH exchange-traded funds (ETFs) for trading in the U.S. on July 23rd, SoSoValue data shows that these products have seen net outflows on six of the nine trading days, with total net outflows reaching $510 million since their launch. Bitcoin spot ETF funds also saw combined net outflows of over $80 million last week.

According to coinmarketcap data, the total market capitalization of cryptocurrencies also fell below $2 trillion, currently standing at $1.986 trillion, representing a 9.4% decline on the day. Since reaching an all-time high of $2.77 trillion in March this year, the market has fallen by over 28%.

Additionally, according to coinglass data, over 200,000 users across the crypto market suffered liquidations in the past 24 hours, with a total liquidated value of $778 million. Among these, a "whale" on Huobi exchange experienced the largest single liquidation of $27 million (approximately 193 million yuan) between 9:00 AM and 9:15 AM. Ethereum, the second-largest cryptocurrency by market cap, saw over $276 million in liquidations over 24 hours, surpassing Bitcoin due to its greater price decline.

Analysts had previously warned that panic sentiment could affect the cryptocurrency market due to geopolitical tensions in the Middle East and low risk sentiment in assets like tech stocks.

According to a report by Beijing Business Daily on the 5th, this sharp decline has been driven by multiple factors. Several analysts interviewed by the newspaper pointed out that changes in market expectations are a major factor behind Bitcoin price fluctuations.

On the one hand, global stock market declines and heightened risk aversion have put pressure on Bitcoin. Even interest rate cuts have failed to boost market confidence, further exacerbating market uncertainty. On the other hand, market fund flows have also had a significant impact on Bitcoin prices. As prices retreated, triggering a series of cascading liquidations, rapid price declines ensued.

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Daily Economic News, compiled from Beijing Business Daily and publicly available information

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