Bitcoin Price Drops to $59,200 Amid Selling Pressure Caused by Macro Events

Stay up to date with our monthly market commentary:

• Macro events, led by the Bank of Japan’s unexpected rate hike and worse-than-expected U.S. economic data, caused a fire sale across all markets.
• U.S. Spot Bitcoin ETFs saw net inflows on 13 out of 21 days in the past month.
• The Ethereum Foundation’s decision to sell ETH worth $100M put pressure on the price of ETH. 
• Bitcoin (BTC) is down 10.5%, while Ether (ETH) is down 23.7% versus last month.*

Market Overview - August

The price of Bitcoin (BTC) dropped by 10.5% in August, ending the month just above the $59,200 level. 

In an unexpected turn of events, the Bank of Japan (BoJ) raised its interest rates from its previous 0% to 0.1% range to 0.25%, ending 17 years of de facto interest-free yen borrowing. Yen carry-trade investors had to unwind their positions, which caused widespread selling across global markets. The Nikkei saw the most significant one-day drop since the infamous Black Monday in 1987. 

To add fuel to the fire(sale), worse-than-expected U.S. employment data was released on the same day, creating concerns about the future of the U.S. economy, which added to the selling pressure. 

Stocks, commodities and a range of other traditional asset classes took a hit, and cryptocurrencies were not spared. 

At one point, Bitcoin dropped to less than $50,000 but quickly recovered, proving its resilience and giving investors a unique opportunity to buy at such low levels again. 

BTC finished the month above the $59,200 level. 

Ethereum’s Ether (ETH), the second biggest cryptocurrency by market capitalization, also saw a month in the red, following Bitcoin and recent macro troubles. 

However, there was also a minor controversy with the Ethereum Foundation, the issuer and maintainer of the Ethereum protocol, which likely contributed to the cryptocurrency’s price drop.  

According to a response on X by the Ethereum Foundation’s Executive Director Aya Miyaguchi, the foundation regularly sells considerable sums of ETH to pay for wages, grants, and infrastructure. This month, they reported selling ETH worth $100 million. This sparked a big discussion within the Ethereum community, with some investors selling their tokens as a result. 

Many of them stated that they had no issue with the sell-off. Still, the way it was handled, mainly by not communicating it publicly and having investors find out about it through social media, was one of the criticized aspects of the sale. 

This situation also highlights the importance of true decentralization, which is what we find in Bitcoin.

Crypto Asset Market Performance Review 

The crypto asset markets finished the month a leg lower, with some of the top ten assets by market capitalization dropping by more than 10%. 

Bitcoin (BTC) saw a monthly drawdown for the third time this year, closing 10.5% lower month-on-month. Its price plunge this month is due to two key events: the troublesome decision by the Bank of Japan to increase its rates unexpectedly, causing a sell-off across the markets; and a worse-than-expected jobs report from the U.S. combined with the Fed deciding not to lower rates in August. 

While Bitcoin dropped to under $50,000 at one point, it recovered in the following days. At one point, it even crossed the $64,000 mark after Jerome Powell announced in Jackson Hole that the Fed would cut rates in autumn. 

However, the market's sentiment wasn’t convincing enough, and Bitcoin finished the month at $59,200. Bitcoin’s price performance also impacted the broader digital assets ecosystem, as most of the prominent coins saw price plunges. 

The only token that held relatively steady was Binance’s native token (BNB). Unlike other altcoins, BNB was less volatile and stabilized after a slight sell-off from its all-time high earlier last month. 

The remainder of the crypto asset market wasn’t as lucky as BNB. Many of the most prominent projects, such as Cardano (ADA), Solana (SOL), Dogecoin (DOGE), or Ripple (XRP), dropped by more than 10%.

Bitcoin Tech Update

Bitcoin Layer 2 solutions continue to make waves, with Bitcoin sidechain Liquid and Stokr announcing innovative breakthroughs on their networks. 

Liquid is a popular sidechain solution with a Bitcoin pegging mechanism. This allows investors and builders to issue tokenized assets on top of Bitcoin. 

One popular application on Liquid that uses asset tokenization is Stokr. They were among the first companies to issue MicroStrategy shares on Liquid (CMSTR). 100 MSTR shares back one share on Stokr. 

MicroStrategy announced a 10-for-1 stock split for its Class A and Class B common stock in early July, which took effect on August 8th. Following MicroStrategy's lead, CMSTR shareholders participated in the first-ever stock split on a Bitcoin sidechain. 

Institutional Interest in Bitcoin

August was an eventful month for institutional digital asset investors as Blackrock iShares Bitcoin Trust (IBIT) surpassed 357,000 BTC, while all U.S. Bitcoin ETFs combined saw net inflows 13 out of 21 trading days this month. 

BlackRock’s iShares Bitcoin Trust (IBIT) holds over 357,000 BTC 

BlackRock’s iShares Bitcoin Trust (IBIT) is not only the fastest-growing ETF in Wall Street history but also on track to become one of the largest Bitcoin holders in the market. 

This month, it surpassed the 357,000 BTC mark, making it the fourth-largest holder of BTC, just behind Binance, Coinbase, and Satoshi Nakamoto. In terms of institutional adoption, BlackRock is the largest holder. 

Its current BTC holding is roughly $21 billion, and despite a market downturn, this largest Bitcoin ETF saw net inflows for most of August. 

U.S. Bitcoin ETFs saw net inflow days 13 out of 21 trading days in August

Despite the market downturn and BTC finishing the month in the red, all U.S. spot Bitcoin ETFs saw net inflows on 13 out of 21 trading days in August. 

During recent Bitcoin dips, when the price dropped by more than 10% in a day, Bitcoin ETFs also saw net outflows. However, most of these days were followed by net-inflow days. 

At one point, from August 15 to August 26, ETF investors seemed to be accumulating more aggressively as all ETFs combined saw net positive inflows. 

In fact, 60% of the largest hedge funds hold Bitcoin ETFs, proving the growing adoption and acceptance of Bitcoin amongst institutional investors. 

Bitcoin on Balance Sheets

Prominent miner Marathon Digital (MARA) announced on August 14 that it acquired 4,144 BTC, boosting its strategic bitcoin reserve to over 25,000 BTC. The purchase was made through an oversubscribed offering of convertible senior notes.

‍*Closing price data is from August 30, 2024 

‍