Crypto prices are dumping, and Bitcoin lost $56,000. Reports indicate that Morgan Stanley plans to offer spot Bitcoin ETFs to clients—could this save BTC?
Financial assets are cyclic; booms and busts are inevitable. In crypto, the boom of Q1 2024 seems to be over after the unexpected burst in early July, which has since been repeated in early August.
Just checked my crypto portfolio pic.twitter.com/JDPum52mcO
— naiive (@naiivememe) August 5, 2024
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The Market Meltdown: Is Crypto Dead?
Today, Bitcoin and top coins have fallen hard.
To quantify, Bitcoin is down -25% in the last trading week while Ethereum and Solana are worse, posting 31% and 37% losses.
(Source)
Further down the market cap leaderboard, the less liquid altcoins, mainly meme coins, are struggling to stay afloat after the hammering.
PEPE is down -46%, while WIF on Solana has lost -53%.
The question now is: Is Crypto dead?
No, not all all.
Admittedly, the sudden market correction during the Asian session caught many investors off guard.
However, this was all expected despite the current concern about the overall health of the crypto market.
There have been thousands of liquidations leading to billions worth of trades lost.
According to Coinglass, 279,441 traders were liquidated in the past 24 hours, pushing the total liquidation to a whopping $1.07 billion.
(Source)
The dump, Coinglass added, saw one trader on Huobi lose $27 million.
The mega liquidation (a welcomed washout of speculators) may signal a shift in market sentiment. This is because leverage traders are forced to exit due to increasing volatility.
Looking at the Bitcoin daily chart, the sell-off seen early today means the coin broke below a critical support level.
(BTCUSDT)
With prices trending below $56,000 or June through July 2024 support, the probability of BTC slipping, falling to $40,000 in the short to medium term, is highly likely.
Indeed, BTC might find support today, and prices recoup losses.
However, the selling momentum is high, and the possibility of an immediate bounce is highly diminished.
So far, prices are banding along the lower BB, pointing to high selling pressure.
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This Is Why Bitcoin Price Is Crashing: Is Crypto Dead?
Several factors are fanning the sell-off.
The bear breakout, as seen in the Bitcoin daily chart, signals weakness.
However, from a fundamental perspective, geopolitical tensions in the Middle East can fuel sellers.
Iran, reports indicate, is mobilizing and may strike Israel anytime.
Meanwhile, the slowdown in the United States economy is a concern.
While the Federal Reserve is likely to slash rates in September, the current risk-off environment negatively impacts crypto and Bitcoin prices.
Will The Morgan Stanley “Earthquake” Spur Demand?
Nonetheless, there are positive developments that might revive demand, especially for Bitcoin.
Reports indicate that Morgan Stanley, a global bank, plans to offer spot Bitcoin ETFs to interested clients.
This could bode well amid a dip in crypto prices, with ‘buy the dip’ marketing a more alluring prospect to potential investors than ‘buy the ATH.’
Though highly welcomed and described by some as a “market earthquake,” there are concerns. In this offering, only accredited investors with at least $1.5 million in net worth will be permitted to get exposure to either Fidelity or BlackRock’s products.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
