Key takeaways:
Increasing US trade deficits, insider stock sales, and struggling Chinese banks are amplifying global investor apprehension.
Large holders and miners continue to offload Bitcoin, with macroeconomic challenges as the primary influence.
Bitcoin (BTC) has plunged to its lowest point in 50 days, dropping below $108,000. This sudden drop surprised traders, leading to $137 million in liquidations of leveraged bullish positions. The decline followed a 1.2% dip in the tech-heavy Nasdaq 100 index, fueled by rising concerns about the durability of growth in the artificial intelligence sector.
Market players are now evaluating if Bitcoin’s decline reflects wider macroeconomic pressures or if it’s confined to the cryptocurrency itself.
Investor anxiety escalated after the United States announced a 22% rise in the trade deficit for July. Imports exceeded exports by $103.6 billion, broadening the gap more than expected by economists. As noted by Reuters trade “could be a major drag on economic growth in the third quarter.”
Significant insider sales and increasing bad debt in Chinese banks raise concerns
X user Malone_Wealth highlighted that all top 200 stock trades by executives, directors, and major shareholders last week were sales, a phenomenon he deemed unprecedented in his lifetime. Insider transactions are usually tracked through filings with the US Securities and Exchange Commission.
Notable transactions included a planned $961 million sale by Jim C. Walton of Walmart, $164 million from Frank Slootman of Snowflake, and $160 million from Dennis J. Wilson of Amer Sports. Other significant trades came from Travis Boersma of Dutch Bros at $81.5 million and Andrew Bialecki of Klaviyo at $73.7 million.
Further worries emerged from China as the nation’s five largest banks reported record-low margins alongside increasing delinquencies, as per the Financial Times. Chinese retail banks wrote off $5.2 billion in bad debt in the first quarter, an eightfold rise from the previous year, according to data from the Banking Credit Asset Registration and Transfer Center.
Concerns deepen in the AI sector as Nvidia and SMCI stocks decline
The AI industry is also becoming a growing source of worry. Nvidia (NVDA) reportedly disclosed that 44% of its data center revenue is generated by just two clients. Despite strong quarterly performance reported on Wednesday and third-quarter revenue guidance meeting expectations, NVDA shares fell by 4.7% over two trading sessions.
On the other hand, Super Micro Computer (SMCI) cautioned on Thursday that flaws in its financial reporting could hinder its ability to publish results. The $25 billion firm, a key partner to Nvidia supplying high-performance AI servers and data center infrastructure, experienced a 5.1% decline in its stock on Friday.
Related: Will Bitcoin trend reverse to $118K or drop to $105K first?
Signs of risk aversion are also apparent in the bond market. Increased demand for US Treasurys pushed the two-year yield down to 3.62%, its lowest level in four months, well below 3.80% a week prior. The willingness of investors to accept lower yields amidst ongoing inflation points to a rising preference for safety.
Recent Bitcoin sales by long-dormant whales and consistent miner outflows have contributed to the negative sentiment. Nevertheless, the primary cause of BTC’s recent decline continues to be the deteriorating macroeconomic outlook, with many traders choosing to minimize exposure ahead of Monday’s US national holiday.
This article serves general informational purposes and is not meant to be or interpreted as legal or investment advice. The opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.
