In brief
Last week, the price $BTC fell by 4% due to a mass sell-off orchestrated by a large investor.
The downturn in the cryptocurrency market was exacerbated by low earnings from major American companies in the artificial intelligence sector.
The future of bitcoin depends on upcoming economic data from the US and liquidity obtained from bond sales.
Last week, the price of bitcoin fell by approximately 4%. Although this is not uncommon for such a volatile cryptocurrency, it is certainly a troubling signal for investors who just two weeks ago saw bitcoin's price exceed $120,000, and now it has fallen back to $100,000.
Ripple effect from the whale
What caused this sudden decline? Upon closer inspection, it becomes clear that it was a two-front attack: from the 'whale' and from the unstable stock market.
The initial factor that triggered the price drop was a long-term bitcoin holder. According to the analytics platform Lookonchain, this 'whale' owned more than 100,000 bitcoins.
Last Monday, they suddenly began to sell off their assets on exchanges like Hyperliquid and switched to Ethereum (ETH). This sell-off lasted more than a day, causing the price of bitcoin to drop approximately from $114,000 to $108,600.
Fortunately, once it became clear that this was a one-off event, the market stabilized and began to recover. By Thursday evening, bitcoin rose to $113,500, almost back to the level from which it started to fall.
AI company stocks are crashing the broader market
As soon as the price of bitcoin began to recover, a new unexpected threat emerged. Leading companies in the field of artificial intelligence and data centers, which had been the main drivers of the US stock market growth throughout the year, published disappointing reports on their earnings for the second quarter. The reports expressed concerns about high levels of debt and declining profitability.
CoreWeave (CRWV) shares fell by 33.1% after the release of the second-quarter report.
Marvell Technology (MRVL) shares fell by about 19% after the data center sector's performance fell short of market expectations.
Even the market leader NVIDIA (NVDA), despite record revenue in the second quarter, did not escape a 3.32% drop due to negative sentiment.
Due to the drop in stocks of artificial intelligence companies, the Nasdaq index fell by 1.32%, marking the sharpest decline since the steep drop in employment on August 1. And since June, bitcoin has shown a high correlation with the Nasdaq, its price fell by 3.72%.
This sequence of events shows how interconnected modern risk assets have become.
What awaits bitcoin in the future?
Bitcoin is struggling, and market forecasts are mixed. Some analysts remain optimistic and predict a quick recovery, while others fear a further drop to the $100,000 level.
Many expect the price to find support around $107,000, but some pessimists warn of a deeper correction to $92,000 if the decline intensifies.
This pessimism is related to the fact that lately bitcoin has not been developing as actively compared to Ethereum, which is attracting more market attention. Despite a similar drop of 6.31% last week, the sentiment and upward momentum for Ethereum remain strong.
At one point, the 'relentless fear' among Ethereum investors seemed ubiquitous, but it now appears to have significantly weakened. Tom Lee, chairman of the Ethereum mining company Bitmine DAT, even claims that $ETH could reach $5,500 in a few weeks and rise to $10,000–$12,000 by the end of the year. This would require a colossal price increase of 100% over four months compared to the current trading price of $4,483.
Two important macroeconomic events may affect the market in the coming week. First, on Tuesday, there will be a sale of US bonds, during which nearly $290 billion worth of short-term bonds will be offered to the market. This could reduce liquidity and put additional pressure on bitcoin.
Secondly, on Friday, data on US non-farm payrolls (NFP) and unemployment rates will be released. A weak NFP figure below 60,000 could heighten expectations of further interest rate cuts, which would likely lead to a rise in risk assets like bitcoin.
Events from last week prove that bitcoin's price now depends more on global liquidity and the broader US market than on internal factors. Investors should remain cautious during this period of high potential volatility.
