Cryptocurrencies slid Wednesday as investors braced for Nvidia earnings and digested a jump in liquidations.
The price of bitcoin was last lower by 5% at $58,537.40, according to Coin Metrics. Ether fell more than 4% to $2,470.53.
The cause of the drop — which began Tuesday evening when bitcoin lost 6% in the span of an hour — wasn’t immediately clear, but investors pointed to skittishness around Nvidia’s upcoming earnings report after the bell, liquidations in the futures market, and ongoing sell pressure from the Mt. Gox distributions and U.S. government holdings.
Bitcoin falls under $60,000
Noelle Acheson, economist and author of the “Crypto is Macro Now” newsletter, suggested investors could be raising cash to play the post-Nvidia earnings market move. The chip giant, which was responsible for a little more than a third of the S&P 500’s 8% earnings growth in the first quarter, is set to report its second-quarter earnings Wednesday after the stock market close.
“Bad news on the earnings front could send the entire stock market tumbling … This could also hit crypto assets as in risk-off moves, traders and investors tend to sell whatever they can,” Acheson wrote Wednesday. “If Nvidia earnings beat expectations, however, we could also see muted crypto performance even while the stock market surges, as AI-related tech stocks are (for now) a more mainstream way of increasing a portfolio’s risk, and for many investors, Nvidia is easier to understand and justify than BTC or ETH.”
On Tuesday evening the futures market saw $93.52 million in long ether liquidations, which forces traders to sell their assets at market price to settle their debts, in a 24 hour period across centralized exchanges. Some $85.93 million in bitcoin liquidations had occurred.
“With prices falling rapidly, this can have a cascading effect on longs which can further exacerbate price declines,” said Adam McCarthy, a research analyst at Kaiko.
Tuesday also marked the end of an eight-day inflow streak into spot bitcoin ETFs, he added, with more than $120 million flowing out of the funds, which may have put pressure on the market.
August, a typically quiet month for crypto and risk assets at large, has been particularly volatile this year. However, cryptocurrencies aren’t strangers to big pullbacks in bull markets, and bitcoin is still safely in the range its been sitting in since April – between $55,000 and $70,000.
Bitcoin is now on pace for an 8.5% loss for August, which would make it its worst month since April. Ether is down more than 22% and heading for its worst month since June 2022.
For the year, bitcoin is still up 41%. Ether is holding onto a more modest 10% gain.
“This is exactly the type of whipsaw liquidations and price action we see in bull markets,” Ryan Rasmussen, an analyst at Bitwise Asset Management, said of the overnight drop. “Bulls get over their skis and get wiped out, then it happens to bears, and so on. When you zoom out, a 5% move in the price of bitcoin is a blip on the radar.”
