Bitcoin and the wider crypto market has suffered a major crash in a broader market downturn that could be hit by a serious bombshell this week.
The bitcoin price, which crashed to under $50,000 per bitcoin on Monday before rebounding slightly, touched $70,000 in July amid excitement over Donald Trump’s “game-changing” plans for bitcoin. The combined bitcoin and crypto market has lost around $800 billion since its recent June highs.
Now, despite billionaire investor Mark Cuban making a “crazy” bitcoin price prediction, the head of institutional research at crypto exchange Coinbase has warned of further bitcoin price volatility to come.
“We believe that these market jitters will persist in the short-term, but it’s possible that shorts could get squeezed here, which could lead to a market rebound in the next few days,” Coinbase’s David Duong wrote in a blog post. “But don’t be fooled into thinking that this market disruption is over.”
The crypto market began crashing on Sunday as Japan stocks sold off due to the unwinding of the massive Japanese yen carry trade.
The carry trade, in which investors borrow in a currency with low interest rates and reinvest the proceeds in higher-yielding assets elsewhere, began unwinding when the Bank of Japan hiked its benchmark interest rate last week and was called “the biggest carry trade the world has ever seen,” by Societe Generale’s chief foreign exchange strategist Kit Juckes, who added “the tougher question is what happens next.”
According to Duong, “recession fears could yet intensify,” in the weeks ahead.
“We think this phase may last through the Fed decision in mid-September. Consequently, we retain our forecast for a choppy market in the third quarter but also believe that this pullback does not represent the start of a new market cycle. Rather, the current sell off is consistent with our defensive approach in the third quarter and more constructive outlook for the fourth quarter, albeit the strength of this move tests our conviction.”
Bitcoin’s decline over the last few days has been outpaced by some smaller cryptocurrencies, with the downturn expected to wipe out some so-called “altcoins.”
“The prevailing negative mood is particularly detrimental to altcoins, many of which are experiencing severe volatility and market cap erosion,” analysts with the Bitfinex bitcoin and crypto exchange wrote comments. “Some of these altcoins may not survive the ongoing market correction.”
Crypto Billionaires Are Selling High
The billionaires whose fortunes are tied up in publicly traded crypto firms Coinbase and MicroStrategy have sold a combined nearly $850 million worth of shares in the last nine months.
Michael Saylor, the founder and CEO of MicroStrategy, a software firm that has invested heavily in bitcoin, sold $362 million of MicroStrategy shares since the start of 2024, according to regulatory filings. Brian Armstrong and Fred Ehrsam, cofounders of Coinbase, the most popular crypto exchange in the U.S., sold $216 million and $270 million of Coinbase shares, respectively, between last November and late July, filings show.
These sales coincide with a rise in cryptocurrency prices. Bitcoin, the largest cryptocurrency, recently hit around $70,000—more than double its value a year ago—After $800 Billion Bitcoin And Crypto Price Crash.
