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- Bitcoin (BTC) fell to just above $64,000 amid a stock market rout and weakening sentiment for risk assets, including cryptocurrencies.
- The plunge led to over $250 million worth of bullish bets being liquidated, the worst hit since early July.
- Bitcoin is priced around $64,200 at the time of writing, a drop of almost 3.5% in the last 24 hours.
- The broader digital asset market, as measured by the CoinDesk 20 Index (CD20), has fallen 5.6%.
Market Outlook
The slump follows the tech-heavy Nasdaq 100 index posting its biggest drop since 2022 after Google parent company Alphabet and Tesla reported mixed quarterly earnings.
Nasdaq 100 Index Plunges
The Nasdaq 100 index, which tracks the performance of the largest technology companies in the US, has fallen by over 5% in a single day. This decline is the largest since March 2022, when the market was still reeling from the impact of the COVID-19 pandemic.
Market Sentiment Weakening
The sudden drop in stock prices and the subsequent liquidation of bullish bets have led to a weakening of market sentiment. This shift in sentiment has had a ripple effect across the cryptocurrency market, causing many digital assets to decline in value.
- Ether (ETH) has fallen over 8% in the last 24 hours, faring worse than the wider crypto market.
- This decline is attributed to $327 million worth of outflows from Grayscale’s Ethereum Trust ETF (ETHE).
- Most other ETH ETFs continued in the green during the Wednesday session, with BlackRock’s ETHA leading the pack at $283.9 million of net inflows.
Grayscale’s Ethereum Trust ETF Experiences Heavy Outflows
The heavy outflows from Grayscale’s ETHE have led to a decline in Ether’s price. This has raised concerns among investors about the potential for further declines in the cryptocurrency market.
- The aggregate market capitalization of the stablecoin sector, which includes hundreds of coins, jumped to over $164 billion for the first time since the collapse of Terra in May 2022.
- This expansion ‘indicates growing investor optimism, underpinning a bullish outlook,’ Wintermute said in a note shared with CoinDesk.
Growing Investor Optimism
The increase in stablecoin supply indicates that money is being deposited into on-chain ecosystems to generate economic activity. This activity fosters positive on-chain growth and can lead to an increase in the value of digital assets.
- Activity in Chicago Mercantile Exchange’s ether futures reached new heights on Tuesday as the debut of spot ETH ETFs in the U.S. galvanized investor interest in the second-largest cryptocurrency.
- The previous peak of 7,550 contracts was set one month ago.
- CME witnessed 14,736 contracts change hands on Tuesday, which is three times higher than the average daily volume of 5,010 contracts seen throughout July.
Increased Activity in Ether Futures
The surge in activity in ether futures can be attributed to the onset of spot ether ETF trading in the U.S. This has led to an increase in investor interest in the second-largest cryptocurrency.
- India to Release Its Crypto Policy Stance by September After Stakeholder Consultations: Report
- Coinbase Asset Management Plans Tokenized Money-Market Fund, a Hot Area After BlackRock’s BUIDL Success: Sources
- Deutsche Telekom Joins RWA-Focused XDC as Infrastructure Provider in Digital Asset Push
