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In summary
- On Monday morning, Bitcoin fell to a 24-hour low of around $57,250, before recovering to levels above $58,000.
- According to data from CoinGecko, the price of Bitcoin fell to a low of $57,257.71 before recovering to its current price of $58,419.26.
- Kristian Haralampiev, Head of Structured Products at Nexo, attributed the drop in Bitcoin prices to market anxiety surrounding the upcoming release of US nonfarm payrolls data.
On Monday morning, Bitcoin fell to a 24-hour low of around $57,250, before recovering to levels above $58,000.
According to data from CoinGecko, the price of Bitcoin fell to a low of $57,257.71 before recovering to its current price of $58,419.26, trading flat on the day, following an 8.6% drop on the week, amid continued outflows from investment products and a prevailing trend of declining exchange reserves.
Speaking to Decrypt, Kristian Haralampiev, Head of Structured Products at Nexo, said that the sharp drop in Bitcoin prices over the past weekend can be attributed to market anxiety surrounding the upcoming release of the US non-farm payrolls data and its potential impact on the Federal Reserve’s monetary policy.
“With the Federal Open Market Committee (FOMC) meeting approaching, investors are bracing for new economic data that could significantly influence the Fed’s decisions,” Haralampiev said.
The market is reflecting mixed signals in the settlement data.
According to CoinGlass, $169.2 million in liquidations were recorded across the Cryptocurrency market in the past 24 hours, with long positions accounting for $125.59 million of that total.
Highlighting key factors to watch in the week ahead, Ryan Lee, Chief Analyst at Bitget Research, told Decrypt that initial jobless claims data will be released this Thursday, followed by unemployment rate data on Friday.
These two data points are important indicators influencing the Federal Reserve’s rate cut decision in September.
Lee also stressed the importance of monitoring “on-chain whale activity” and “BTC ETF inflows and outflows” as potential market drivers.
Investment products face turbulent waters
Market resilience is being tested as cryptocurrency investment products experienced a wave of negative sentiment last week.
According to a Coinshares report released on Monday, digital asset investment products saw outflows totaling $305 million last week, with widespread negative sentiment evident across multiple providers and regions.
James Butterfill, Head of Research at CoinShares, attributed this shift to “stronger than expected economic data in the US, which has diminished the likelihood of a 50 basis point interest rate cut.”
Outflows were particularly pronounced for Bitcoin, which saw outflows of $319 million from investment products.
Interestingly, Bitcoin shorts bucked this trend, with Butterfill noting that they saw a “second consecutive week of inflows totaling $4.4 million, the largest since March of this year.”
The Ethereum market is also facing challenges, with Coinshares noting that Ethereum saw $5.7 million in outflows, while trading volumes stagnated, reaching just 15% of levels seen during the ETF’s launch week in the US.
Ethereum was trading at $2,522.45 on Monday morning, down 0.9% over the past 24 hours and 10% on the week, according to data from CoinGecko.
Exchange reserves hit multi-year low
Despite these short-term investment flows, a deeper analysis of the on-chain data reveals a potentially long-term bullish trend.
Cryptocurrency exchanges around the world now hold just 2.39 million BTC, valued at roughly $139.86 billion, according to data from Coinglass.
This represents a significant 25% decrease from its peak in 2020, when exchanges held nearly 3.2 million BTC.
A CryptoQuant analyst linked the development to the growing adoption of self-custody strategies, noting that declining BTC reserves on exchanges could “indicate reduced selling pressure, potentially favoring a bull market if demand continues to grow.”
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