Bitcoin experienced a significant downturn on Thursday, falling below the $110,000 mark amidst a wider sell-off affecting both cryptocurrency and stock markets. The leading cryptocurrency saw a decline of over 3%, with other digital assets like Ethereum and Solana facing even steeper losses during a notably tumultuous week for the crypto sector.
Ethereum dropped approximately 5%, dipping beneath $3,900 before managed to recover slightly from its losses, marking its lowest price point since August. The decreased confidence in the Ethereum market was reflected in significant net outflows from Ethereum exchange-traded funds (ETFs) in the previous 24 hours.
Samer Hasn, a senior market analyst at the asset brokerage platform XS.com, noted that the continued downward pressure on prices can be attributed to a lack of sufficient buying power to support asset values, especially following a wave of liquidations earlier this week. He highlighted that over $1.6 billion in long positions were liquidated on Monday alone, which has contributed to the prevailing cautious sentiment among investors. During the past day, an additional $511 million in crypto assets was liquidated, further unsettling market participants.
This bearish trend is occurring concurrently with a pullback in equity markets, as investors are expressing apprehensions about market exuberance driven by artificial intelligence hype and uncertainties regarding the Federal Reserve’s interest rate plans. Analysts have pointed out that September is historically seen as a volatile month for cryptocurrencies, although the final quarter of the year typically offers more favorable conditions.
In addition to these challenges, crypto advocates note another hurdle posed by the Treasury General Account, the U.S. government’s operational checking account at the Federal Reserve. The Treasury has been replenishing this account recently by issuing T-bills and bonds, which effectively drains liquidity from the market. Such a shift of capital into government debt tends to dampen demand for riskier assets, including Bitcoin and other cryptocurrencies.
The impact of the cryptocurrency downturn also rippled through crypto-related equities on Thursday. Notable trading platforms, such as Robinhood and Coinbase, each saw declines exceeding 1%. Other companies involved in the crypto space, including Bitcoin holder MicroStrategy and stablecoin issuer Circle, also faced losses during this period.
As the situation develops, analysts and investors alike are keeping a close watch on market dynamics and how external factors will influence the trajectory of cryptocurrencies in the coming weeks.
