Important takeouts:
The rising US trade deficit, insider stock sales and weak Chinese banks have raised the attention of global investors.
Whales and miners continue to sell Bitcoin, but macroeconomic weakness remains the dominant driver.
Bitcoin (BTC) fell to its lowest level at under $108,000 in 50 days. The sudden decline caused traders to escape and $137 million in liquidation of leveraged bull positions. The move came after a 1.2% drawback on the high-tech Nasdaq 100 index, driven by growing questions about the sustainability of growth in the artificial intelligence sector.
Market participants are currently considering whether the Bitcoin recession reflects broader macroeconomic pressures or whether it is limited to cryptocurrency.
Investor attention has been strengthened after the US reported a 22% increase in trade deficit in July. Imports surpassed exports by $10003.6 billion, expanding the gap more than economists had predicted. Reuters said trade “can be a major resistance to economic growth in the third quarter.”
Major insider sales and increased bad debts from Chinese banks increase risk
X-user Malone_Wealth pointed out that last week’s top 200 stock transactions by executives, directors and key shareholders were all sold, something he described as unprecedented in his lifetime. Insider activities are typically monitored through filings with the Securities and Exchange Commission.
Notable transactions included a $961 million sale by Jim C. Walton at Walmart, $164 million from Franks Rotman at Snowflake and $160 million from Dennis J. Wilson at Amel Sports. Other major moves came from Dutch Brothers’ Travis Ballerma at $81.5 million and Kravillo’s Andrew Bialaki at $73.7 million.
Additional concerns have emerged from China after the country’s five biggest lenders reported record margins and increased arrears, according to the Financial Times. China’s retail banks scrapped $5.2 billion in bad debt in the first quarter. This is an eight-fold increase from the previous year, based on the bank’s credit asset registration and transfer centre figures.
The AI sector is worried as Nvidia and SMCI stocks drop
The AI sector has also become a source of growth in anxiety. NVIDIA (NVDA) reportedly revealed that 44% of the data center’s revenue comes from just two clients. Despite strong results for Wednesday’s quarter and third-quarter earnings guidance in line with forecasts, NVDA stock fell 4.7% in two trading sessions.
Meanwhile, Super Micro Computer (SMCI) warned on Thursday that weaknesses in financial reporting could undermine their ability to release results. The $25 billion company, a leading NVIDIA partner providing high-performance AI servers and data center infrastructure, saw its share price fall by 5.1% on Friday.
Related: Bitcoin trend reversal decreases to $118k or another $105,000. Will this come first?
Signs of risk aversion were also evident in the bond market. Demand for the US Treasury reduced its two-year yield to 3.62%, falling to a lowest level in four months, well below 3.80% just a week ago. In spite of sustained inflation, investors’ willingness to accept lower returns suggests a growing preference for safety.
Recent Bitcoin sales by long-term whales and stable miners added to the negative tone. Still, the main driver of BTC’s latest decline is weakening the macroeconomic outlook, with many traders choosing to reduce exposure over Monday’s US public holidays.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
