Analysts report that a convergence of various factors is driving the cryptocurrency market to its lowest level in three weeks, with Bitcoin’s price dipping below $60,000 on Sunday for the first time since July 13.
The asset saw a 10% drop over the weekend, plummeting to just under $55,000, according to CoinGecko data. The total liquidation volume in the past 24 hours surged to $620 million, with 90% of the wiped-out orders being buy orders, CoinGlass data reveals.
Rich Rosenblum, co-founder of trading firm GSR, attributes the market’s volatility and investor anxiety to uncertainty surrounding the U.S. elections, fluctuating interest rates, and potential instability in the Middle East.
“Most indicators suggest that cryptocurrencies are entering the second phase of a bull market,” he remarked. “However, a macroeconomic or geopolitical collapse, akin to March 2020, could severely impact cryptocurrencies, as many ‘tourist’ investors who joined last year do not have strong confidence in the market.”
“If that occurs, it could present a ‘great buying opportunity,’ as ‘the worse the macroeconomic situation, the more money will need to be printed,’ Rosenblum added. Increased money printing often leads to inflation by stimulating borrowing through various programs, including open market operations and quantitative easing, potentially making assets like Bitcoin more attractive to investors.
Rosenblum stated, ‘Whether it’s to revive a labor market mostly added to the government payroll and part-time jobs, to fund an expensive war machine, or to implement poorly thought-out plans to combat inflation, the worse the situation gets, the more favorable Bitcoin becomes as monetary policy spirals into chaos once again.’
The path to the White House for former President Donald Trump in November has also been upended after President Joe Biden withdrew from the race last month and endorsed Vice President Kamala Harris.
Currently, Harris appears to be gaining an edge in the polls, with nationwide voters preferring her over Trump by a 1% margin. Simultaneously, in key battleground states, Harris has pulled even, according to a recent CBS News poll.”
The uncertainty surrounding the clear winner and insights into which U.S. policies will be implemented next year comes as geopolitical tensions escalate in the Middle East over the weekend.
Israel is currently bracing for potential attacks from Iran and Hezbollah this week, with the assaults expected to come from multiple fronts, local media reported on Sunday.
The flare-up in the Middle East risks escalating into a larger conflict, which could disrupt trade activities in the region and wreak havoc on both domestic and global markets.
Ryan McMillin, Chief Investment Officer at the cryptocurrency fund management firm Merkle Tree Capital, remarked, “Cryptocurrencies might experience sell-offs on weekends like this because they are the only assets that can be liquidated.”
Despite most obstacles seemingly converging and catching traders off guard, McMillin believes the worst may already be behind us.
“Finding Bitcoin at the bottom of its five-month range isn’t actually too bad,” he said.
