Here are some of the major developments in the world of crypto over the past few days.
Former President and presidential candidate for 2024 Donald Trump warned, in an interview with streamer Adin Ross, against the selling of the U.S.'s Bitcoin holdings by the administration. To that, Trump had said, "The digital asset sector needs to catch up in innovation; otherwise, the U.S. is going to be left behind by its geopolitical peers—particularly China, which has huge growth potential in cryptocurrency and artificial intelligence.".
He termed Bitcoin a "very modern currency," adding that many brilliant, solid people had moved into the sector. As far as he was concerned, huge investment was needed in energy infrastructure for the industries of the future—of which Bitcoin mining and AI data centres are part.
He added that much like an asset with its supply capped, Bitcoin could appreciate against the inflating of the US dollar and slowly start to shift this country's wealth into a more stable monetary system. He claimed he was stopping an economic collapse by shifting value away from the fiat currency toward a sound financial system constrained by hard mathematics in its shift.
Crypto Market Dives Into "Extreme Fear" Zone Amid Massive Outflows
The Crypto Fear and Greed Index, for the first time in the past two years, crashed to 17 out of 100 into the "Extreme Fear" zone on August 5—the lowest since July 12, 2022. It stood at 67 just a week ago, depicting a dramatic tectonic shift in sentiment. This was due to considerable outflows from US-based spot Bitcoin ETFs, where a staggering $168.4 million was withdrawn from just two key funds: Grayscale Bitcoin Trust and ARK 21Shares Bitcoin ETF.
The prices of Bitcoin and Ethereum fell by 10% and 18%, respectively, within less than two hours; more than $600 million in leveraged long positions were liquidated and contributed to losses for many. Altcoins have been hit the hardest at a time when weak employment data, sluggish growth in major tech stocks, and revived fears of recession wiped trillions in value from the U.S. stock market.
Despite the tumult, Bitcoin recovered 11.85% from $49,780 to $55,680. Some analysts, like Tuur Demeester, have speculated that if Bitcoin were to bottom out at the fat end, that would be between $40,000 and $45,000. It's risky business betting on a bearish outlook in a bull market.
U.S. Gov't Wallet Moves 300 ETH Amid Ethereum's Market Struggles
According to an event from a wallet dated August 5, despite the overall market downturn, a wallet reportedly associated with the U.S. government transferred 300 Ether ETH, worth nearly $699,000. The transfer, as detected by Arkham Intelligence, was from a wallet already holding funds seized by the U.S. government, now displaying a $0 balance to a wallet address ending in "d46".
The transfer happened just at a time when Ether had disappointing price action after the launch of Ethereum exchange-traded funds in the U.S. According to an independent analyst called Crypto Lion, the poor performance of ETH could result from a lack of demand on the exchanges. Just after that, it is soaking—the market, stirring heavy selling pressure after the interest rate hike by the Bank of Japan. It was reported that market makers sold some 130,000 ETH, worth $290 million, which drove Ethereum to almost $2,100 on August 5, well below its 200-day exponential moving average.
CoinShares announced that $146 million in capital outflows from Ethereum investment funds happened during the week ending August 5, bringing it to a total of $430 million since the launch of the ETF. According to CoinShares analyst James Butterfill, what is at play right now about the slump of cryptocurrency markets is driven by macroeconomic factors and geopolitical tensions - boding for a possibly longer recovery period for ETH.