Bitcoin slipped back towards $55,000 yesterday, following a massive sell-off in the broader market on Tuesday.
On Wednesday, the price of this major cryptocurrency fell by 2% to $56,589.80, according to Coin Metrics. It fell sharply on Wednesday as low as $55,673.80 at the start of trade in Asia Pacific but has since stabilized.
Technology stocks struggled in US trade on Tuesday, as the sector suffered its worst day since September 2022 while two readings on manufacturing output showed signs of weakness, rekindling concerns about the health of the economy. Japan's Nikkei 225 and the broader Topix ended trading on Wednesday with their worst one-day losses since the sell-off on August 5.
Recently, bitcoin movement has sometimes been seen to be quieter than stocks during trading hours in the US on big market days. James Davies, co-founder of crypto trading platform Crypto Valley Exchange, explained that traders react "more dynamically" to macro events during trading in Asia.
"Crypto trading in the US comprises about 30% of the global volume, but it is largely driven by institutional activity, especially in derivatives such as CME futures, which are often less reactive to the immediate market trends they have anticipated," he said. "In contrast, the Asian market, which accounts for nearly 50% of the global total, focuses more on the retail sector. As a result, during Asian trading hours, bitcoin tends to react more actively to global financial movements, such as stock market shifts.”
August was a difficult month for bitcoin and its weak trading movement may continue for another month. Analysts have warned that the cryptocurrency may slip back to $50,000 in September as traders await a clearer direction on US interest rate cuts and the upcoming presidential election.
September is historically the worst month for bitcoin. The currency has only posted gains in three of the past 11 months of September and that month had the largest average loss of the year for the currency at 4.8%, according to CoinGlass.
