Cryptocurrency Market Suffers Another Major Plunge: Bitcoin Falls Below $58,000, Triggering Liquidations

Cryptocurrency Market Suffers Another Major Plunge: Bitcoin Falls Below $58,000, Triggering LiquidationsIn the early hours of August 28, the cryptocurrency market experienced a sudden and sharp decline, with Bitcoin's price dropping below $58,000 at one point, representing a daily loss of over 7%. Ethereum also suffered, falling below $2,400 to reach a low of $2,388, marking a daily drop of over 9%

Cryptocurrency Market Suffers Another Major Plunge: Bitcoin Falls Below $58,000, Triggering Liquidations

In the early hours of August 28, the cryptocurrency market experienced a sudden and sharp decline, with Bitcoin's price dropping below $58,000 at one point, representing a daily loss of over 7%. Ethereum also suffered, falling below $2,400 to reach a low of $2,388, marking a daily drop of over 9%. According to CoinGlass data, a total of 85,563 users were liquidated in the past 24 hours, with total liquidated assets reaching $314 million.

This plunge is not an isolated incident. In the early hours of the US stock market overnight (August 27, Beijing time), the cryptocurrency market also saw a small but sharp drop. This triggered a decline in US cryptocurrency stocks, with MarathonDigital falling over 4.36%, Canaan Inc. down over 3.77%, MicroStrategy down 4.69%, Coinbase down 2.79%, RiotPlatforms down 5.5%, and CleanSpark down 5.67%. These stocks continued to decline further after the US stock market closed, with MarathonDigital and MicroStrategy both experiencing losses exceeding 3%.

It's worth noting that the Nasdaq is seeking approval from the US Securities and Exchange Commission (SEC) to launch and trade Bitcoin index options. The Nasdaq stated that the proposed Nasdaq Bitcoin Index Options will track the CMECF Bitcoin Real-Time Index, developed by CFBenchmarks, which is designed to track Bitcoin futures and options contracts offered by CME Group's exchanges.

The recent volatility in the cryptocurrency market can be traced back to Federal Reserve Chair Jerome Powells speech last Friday. On August 23, Powell announced at the "Global Central Banking Annual Meeting" that "the time is right to adjust policy," which was interpreted by the market as the most explicit signal yet for a rate cut. He also stated that the US economy is growing at a "solid pace," and expressed increased confidence that inflation would fall to 2%, easing concerns of a recession. He did not mention a "gradual" rate cut, leaving room for a more significant policy adjustment.

Following Powell's speech, the cryptocurrency market began a rapid climb, with Bitcoin rising from around $60,000 to hit $65,000 at one point on the same day. After a brief adjustment, Bitcoin broke through the $65,000 mark on August 26, with other cryptocurrencies following a similar trend. At the same time, $251 million in net inflows were recorded into spot Bitcoin exchange-traded funds (ETFs) last Friday.

However, Bitcoin subsequently began to oscillate downwards, accelerating its decline in the early hours of today. Institutional analysts believe that major tokens are digesting the boost received last week due to Powells hinting at a lower benchmark interest rate. Some analysts have pointed out that the mining cost for Bitcoin miners is as high as $72,224 per coin, significantly higher than the current price of Bitcoin, which could put downward pressure on the market.

The recent plunge in the cryptocurrency market once again highlights its high volatility. Investors should exercise caution and take a rational view of market risks.