Top 5 Reasons Why Bitcoin, ETH, SOL, XRP, Meme Coins Are Crashing

As a seasoned market analyst with over two decades of experience under my belt, I have witnessed numerous market fluctuations, both bullish and bearish. The current state of the crypto market, with a staggering $160 billion loss in just a week, is a stark reminder of the inherent volatility that characterizes this space.

The crypto market has lost $160 billion in a week as the market cap plunges to $1.98 trillion from $2.14 trillion. Leading cryptocurrencies Bitcoin and Ethereum prices today tumbled to a low of $55,606 and $2,306, respectively. Other top altcoins such as BNB, Solana, XRP, Dogecoin, Toncoin, Cardano, and meme coins also succumbed to the crashing crypto market, triggered by factors such as macroeconomic events, bearish sentiment, and technical chart weakness.

Here’s Why Crypto Market Falling

1. The cryptocurrency market is experiencing a downturn, even as U.S. Federal Reserve officials express optimism about potential interest rate reductions in September due to slowing inflation and employment rates in America.

1. September Is Bearish For Stocks and Crypto Market

Historically speaking, September has been a challenging month for both the cryptocurrency market and other asset classes. Over the past ten years, bonds have fallen in eight out of those months, while gold has seen a decline every year since 2017. Consequently, Bitcoin, Ethereum, Ripple (XRP), Solana (SOL), and meme coins are experiencing a drop today.

As a researcher, I’m reporting the significant declines in major stock market indices yesterday. The Dow Jones dropped by 1.51%, the S&P 500 plummeted 2.12%, and most notably, the Nasdaq Composite took a steep dive of 3.26%. This marks the worst drop for the Nasdaq since the selloff on August 5.

The data from Coinglass shows that approximately $200 million worth of cryptocurrency was wiped out over the past day. Of this total, around $173 million was liquidated due to long positions and a further $27 million was liquidated from short positions, reflecting the prevailing bearish market trend.

Top 5 Reasons Why Bitcoin, ETH, SOL, XRP, Meme Coins Are Crashing

Additionally, approximately 75,000 traders faced liquidation, with the highest single liquidation order taking place on the cryptocurrency exchange Binance when an individual sold Ether (ETH) for Tether (USDT) worth around $2.94 million. Despite this, investors have generally maintained a positive outlook towards Ripple (XRP).

2. Spot Bitcoin (BTC) ETF and Spot Ethereum (ETH) ETF Outflows

As a researcher, I’ve observed an intriguing trend in the U.S. market: for the fifth week running, Bitcoin ETFs have experienced a withdrawal of funds, which seems to be dampening investor confidence in the crypto space. Particularly noteworthy is the case of Fidelity Bitcoin ETF (FBTC), which recorded an impressive outflow of $162.3 million on Tuesday, eclipsing even the recent withdrawals from GBTC. This suggests a significant shift in investment patterns towards Bitcoin ETFs.

As an analyst, I observed a notable outflow of approximately $47.4 million from Ether ETFs on Tuesday, marking the start of this month with withdrawals that have not been seen in the recent past. The current Ethereum price is grappling to reach new all-time highs and is currently trading below the $2,400 mark, representing a 4% drop over the last 24 hours.

Ether ETFs Went Backward in First Month.. flows -$476m as the newbies couldn’t overcome the $ETHE unlock, too powerful a force (this is why I reiterated how heroic the New Nine bitcoin ones were) but good news is unlock will end, there’s light at end of tunnel via @JSeyff
— Eric Balchunas (@EricBalchunas) September 3, 2024

3. Bank Of Japan Governor Affirms Further Rate Hike

1. The Governor of the Bank of Japan, Kazuo Ueda, emphasized in a report presented to a government committee led by departing Prime Minister Fumio Kishida that additional interest rate increases would be necessary. Consequently, the Japanese stock index, known as Nikkei 225, experienced a decline of 4.24% today due to the Bank of Japan’s rate hike, a selloff in tech stocks led by Nvidia, and indications of an impending US recession.

Previously reported by CoinGape, surveys among economists suggest an anticipated increase in interest rates by the Bank of Japan before the year ends. Additionally, Pacific Investment Management foresees such a rate hike taking place in January.

There’s growing concern among traders that a cryptocurrency market crash might happen soon, as more hedge funds and corporations are engaging in Japanese yen carry trades.

4. Bitcoin Price Dropped After Weak ISM Manufacturing PMI Data

Yesterday’s crypto market downturn followed swiftly after the latest ISM Manufacturing PMI figures revealed that factory activity has been sluggish for a fifth straight month. The ISM Manufacturing PMI reading for August was 47.2, falling short of the predicted 47.5.

Economic data showing weakness in U.S. manufacturing has sparked concerns about a potential recession. This week, traders are focusing on several key employment indicators, such as job creation figures, unemployment rate, and JOLTs job openings. According to analysts at Citibank, if the job growth for this month is around 125,000 new jobs, while maintaining an unemployment rate of 4.3%, it could prompt the Federal Reserve to lower interest rates by 0.5%.

5. DOJ Subpoena Nvidia for Antitrust Investigation

1. The U.S. Department of Justice has stepped up its examination of potential anticompetitive practices by Nvidia, a leading AI chip manufacturer, by serving them subpoenas. These actions have prompted investors to respond swiftly due to the increased regulatory attention. This situation recalls the Microsoft antitrust case, which had significant market implications back in 2000.

Significantly, the Nasdaq stock market experienced a drop of approximately 75% between March 2000 and October 2002. This decline in value essentially wiped out many of the gains that technology stocks had made since the start of the tech bubble.

2024-09-04 12:54