Bitcoin Plunges Below $56,000, Over 75,000 Liquidated Across Exchanges, Chilling Crypto Markets

Bitcoin Plunges Below $56,000, Over 75,000 Liquidated Across Exchanges, Chilling Crypto MarketsBitcoin plummeted by over 4% in the past 24 hours, breaking below the $56,000 mark, reaching a new one-month low. Other major cryptocurrencies like Ethereum also followed suit in the decline

Bitcoin Plunges Below $56,000, Over 75,000 Liquidated Across Exchanges, Chilling Crypto Markets

Bitcoin plummeted by over 4% in the past 24 hours, breaking below the $56,000 mark, reaching a new one-month low. Other major cryptocurrencies like Ethereum also followed suit in the decline. Data from Coinglass reveals that over 75,000 accounts were liquidated within the past 24 hours, resulting in a total loss of $200 million.

This recent downturn is primarily driven by economic anxiety. As global capital flees high-risk assets, Bitcoin prices touched a one-month low earlier this week. On September 4th, Bitcoin briefly dipped by over 5% before partially recovering but remained below the $56,000 threshold.

Concerns over the US economic outlook are the primary catalyst for market panic. The US July nonfarm payroll data, significantly lower than anticipated, sparked fears of an economic recession. The upcoming release of the August nonfarm payroll data on Friday is expected to shed further light on the state of the economy, with traders closely monitoring this key indicator.

Sean McNulty, head of trading at cryptocurrency market maker ArbelosMarkets, noted a resurgence in demand for hedging against Bitcoin declines in the options market, both for the period following the upcoming US employment data release and the period after the November presidential election. He stated, "We are seeing renewed interest in Bitcoin options downside purchases, especially for price points at and below $55,000."

Furthermore, net outflows from spot Bitcoin ETFs reflect the cautious market sentiment. 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 in outflows. This follows an eight-day streak of net inflows, totaling $753 million, for all spot Bitcoin ETFs.

It's worth noting that on September 3rd, the 12 ETFs experienced a combined outflow of $287.8 million, marking the largest single-day outflow in the past four months. Fidelity's FBTC led the outflows, recording $162.3 million. Grayscale's GBTC saw $50.4 million in outflows, while Bitwise's BITB and Cathie Wood's ARKB recorded $25 million and $33.6 million in outflows, respectively.

Beyond fundamental market factors, the rising prevalence of Bitcoin ATM scams is further fueling investor concerns about the cryptocurrency market. The US Federal Trade Commission (FTC) released a report on Tuesday indicating a sharp increase in financial scams involving Bitcoin ATMs. In 2023, consumer reports of losses due to Bitcoin ATM scams reached $114 million, a nearly 900% increase from the previous three years. The first half of this year alone saw $66 million in losses, highlighting the escalating trend, with an average loss of $10,000 per victim.

According to BetterBusinessBureau, a US business credit rating agency, cryptocurrency-related scams have become one of the most common types of financial fraud. Criminals often target older consumers, with the FTC noting that individuals aged 60 and above are more than three times as likely to be victims of Bitcoin ATM scams compared to younger individuals.

In a typical Bitcoin ATM scam, fraudsters may claim that the victim's computer has been hacked or that their bank account is suspected of drug trafficking or money laundering. They offer assistanceon the condition that the victim strictly follows their instructions. Scams can also involve posing as representatives of the FTC, the Internal Revenue Service (IRS), or other government agencies.

The FTC explains that scammers will then instruct the victim to withdraw cash from their bank and visit a nearby Bitcoin ATM. They will send a QR code via text message for the victim to scan on the machine, transferring funds directly into the scammer's cryptocurrency wallet. The FTC's conclusion warns: "Don't trust anyone who says you need to use a Bitcoin ATM to protect your money or fix a problem. Genuine businesses and government agencies never do thisanyone who does is a scammer."

Bitcoin's continued price decline, waning market confidence, and rising liquidations across exchanges are indicative of a crypto winter. Investors need to carefully monitor market developments and adopt cautious investment strategies to mitigate potential risks.