Cryptocurrencies fell on Wednesday as investors prepared to Nvidia profits and digested an increase in liquidations.
The price of Bitcoin was down 5% at $58,969.65, according to Coin Metrics. Ether fell more than 3% to $2,503.63.
The cause of the drop — which began Tuesday night when bitcoin lost 6% in the space of an hour — was not immediately clear, but investors pointed to nervousness around Nvidia’s upcoming earnings report after the bell, liquidations in the futures market and continued selling pressure from Mt. Gox distributions and U.S. government assets.
Bitcoin Falls Below $60,000
Noelle Acheson, an economist and author of the newsletter “Crypto is Macro Now,” suggests that investors could raise money to take advantage of market moves following Nvidia’s earnings release. The chip giant is scheduled to report its second-quarter results Wednesday after the stock market closes, and the event is considered “one of the most important events” on this year’s macroeconomic calendar.
“Bad earnings news could send the entire stock market into a tailspin… This could also hit crypto assets, as in risk-off moves, traders and investors tend to sell whatever they can,” Acheson wrote Wednesday. “However, if Nvidia’s earnings beat expectations, we could also see muted crypto performance even as the stock market surges, as AI-related tech stocks are (for now) a more common way to add risk to a portfolio, and for many investors, Nvidia is easier to understand and justify than BTC or ETH.”
On Tuesday night, the futures market saw $93.52 million in long ether liquidations, forcing traders to sell their assets at market prices to settle their debts over a 24-hour period on centralized exchanges. Some $85.93 million in bitcoin liquidations took place.
“With prices falling rapidly, this can have a cascading effect on long positions, which can further exacerbate price declines,” said Adam McCarthy, research analyst at Kaiko.
Tuesday also marked the end of an eight-day streak of inflows into spot Bitcoin ETFs, he added, with more than $120 million flowing out of the funds, which may have put pressure on the market.
August, a typically quiet month for cryptocurrencies and risk assets in general, has been particularly volatile this year. However, cryptocurrencies are no strangers to big pullbacks in bull markets, and bitcoin is still safely within the range it has been in since April, between $55,000 and $70,000.
Bitcoin is now on track to lose nearly 10% in August, making it its worst month since April. Ether is down more than 23% and is headed for its worst month since June 2022.
Bitcoin is still up 38% on the year. Ether is holding on to a more modest 10% gain.
“This is exactly the kind of sell-off and see-saw price action we see in bull markets,” Bitwise Asset Management analyst Ryan Rasmussen said of last night’s drop. “The bulls get wiped out and get wiped out, and then it happens to the bears, and so on. If you step back, a 5% move in bitcoin’s price is just a blip on the radar.”
