It was a turbulent week: What fueled the price drop?

Welcome to Asia Pacific Morning Brief. An important digest of overnight cryptographic development that shapes regional markets and global sentiment. Monday’s edition was a summary from last week, and this week’s forecast was brought by Paul Kim. Grab some green tea and look at this space.

Bitcoin prices fell by around 4% last week. This isn’t uncommon for infamous, volatile cryptocurrencies, but it certainly is unsettling for investors who saw a surge in prices above $120,000 just two weeks ago.

Whale ripple effect

What prompted this sudden economic recession? A closer look reveals two extension attacks from the whales and the stock market shaking.

The first trigger for a price drop was a single longtime Bitcoin holder. According to the on-chain analytics platform LookonChain, the “whale” holds over 100,000 Bitcoins.

Last Monday, they suddenly started selling their holdings in exchanges such as high lipids and transitioning to Ethereum (ETH). The sale continued over a day, with Bitcoin prices plummeting from around $114,000 to $108,600.

Fortunately, once the cause was identified as a one-off event, the market began to stabilize and recover. By Thursday night, Bitcoin had returned to $113,500, which was almost the starting point before the drop.

AI stocks beat the broader market

Just as Bitcoin was repaired, new unexpected threats emerged. The AI ​​and data center giants, the leading engine of year-round rise in the US stock market, have released a disappointing second-quarter earnings report. The report cited concerns about high debt and reduced profitability.

CoreWeave (CRWV) plunged in stock by 33.1% after its second quarter report. Marvell Technology (MRVL) fell approximately 19% as the data center sector fell below market expectations. Despite achieving record-breaking second-quarter revenues, even market leader Nvidia (NVDA) fell 3.32% as negative emotions spread.

This decline in AI stocks led to Nasdaq falling 1.32%, the sharpest decline since the employ-driven plunge on August 1. Also, Bitcoin has been correlated with Nasdaq since June, causing prices to fall 3.72%.

This series of events demonstrates how risk assets today are interconnected.

What’s next for Bitcoin?

Market forecasts are mixed as Bitcoin struggles. Some analysts remain bullish, with some expecting a quick recovery while others fearing a further drop to the $100,000 level.

Many expect to find support in the price of around $107,000, but some pessimists have warned of a deeper fix to $92,000 if the slump gets escalated.

This pessimism stems from Bitcoin’s recent lack of momentum, and Ethereum has attracted market attention. Despite a similar 6.31% drop last week, Ethereum’s sentiment and upward momentum remains strong.

At one point, the “no staking fear” among Ethereum investors seemed to be widespread, but now it appears to be largely declining. Tom Lee, chairman of Ethereum Dat Company Bitmine, claims that Eth could reach $5,500 in a few weeks, and could reach $10,000 to $12,000 by the end of the year. This requires a monumental 100% price increase from the current trading price of $4,483 to four months.

Two major macroeconomic events could shake up the market next week. The first is a US bond auction on Tuesday, with about $290 billion in short-term bonds hitting the market. This could undermine liquidity and put more pressure on Bitcoin.

The second is the US Non-Agricultural Payroll (NFP) release and unemployment rate on Friday. A weak NFP of less than 60,000 can increase expectations for continuous interest rate reductions and increase risky assets like Bitcoin.

Last week’s event proves that Bitcoin prices are now more closely linked to global liquidity and the wider internal drivers of the US market. Investors should be cautious during this potentially high volatility period.