Key takeaways:
Increasing US trade deficits, insider stock sales, and struggling Chinese banks have heightened global investor caution.
Major players and miners continue to sell Bitcoin, yet broader macroeconomic weakness is the leading factor.
Bitcoin (BTC) fell to its lowest point in 50 days, dipping below $108,000. This sudden drop surprised traders and triggered $137 million in liquidations of leveraged bullish positions. The decline followed a 1.2% dip in the tech-heavy Nasdaq 100 index, sparked by rising doubts about the sustainability of growth in the artificial intelligence sector.
Market participants are now considering whether Bitcoin’s decline indicates wider macroeconomic challenges or is confined to the cryptocurrency market.
Investor anxiety increased after the United States reported a 22% rise in the trade deficit for July. Imports exceeded exports by $103.6 billion, widening the gap more than analysts had anticipated. Reuters noted that trade “could significantly impact economic growth in the third quarter.”
Significant insider sales and increasing bad debt in Chinese banks escalate risk
X user Malone_Wealth highlighted that the top 200 stock trades by executives, directors, and major shareholders last week were entirely sales, a situation he described as unprecedented. Insider activity is commonly tracked through reports filed with the US Securities and Exchange Commission.
Notable transactions included a planned $961 million sale by Walmart’s Jim C. Walton, $164 million from Snowflake’s Frank Slootman, and $160 million from Amer Sports’ Dennis J. Wilson. Other significant sales came from Dutch Bros’ Travis Boersma at $81.5 million and Klaviyo’s Andrew Bialecki at $73.7 million.
Moreover, additional worries arose from China, as the nation’s five largest banks reported record-low margins and an increase in delinquencies, according to the Financial Times. Chinese retail banks disposed of $5.2 billion in bad debt in the first quarter, an eightfold increase compared to the previous year, based on data from the Banking Credit Asset Registration and Transfer Center.
Concerns in the AI sector deepen as Nvidia and SMCI stocks decline
The AI sector has become a rising source of apprehension. Nvidia (NVDA) reportedly disclosed that 44% of its data center revenue was generated from just two clients. Despite strong quarterly results reported on Wednesday and third-quarter revenue guidance meeting expectations, NVDA shares dropped 4.7% over two trading sessions.
At the same time, Super Micro Computer (SMCI) indicated on Thursday that vulnerabilities in its financial reporting might hinder its ability to publish results. The $25 billion company, which is a key Nvidia partner supplying high-performance AI servers and data center infrastructure, saw its stock fall 5.1% on Friday.
Related: Will Bitcoin trend reverse to $118K or drop further to $105K? Which will come first?
Signs of risk aversion were also apparent in the bond market. Increased demand for US Treasurys drove the 2-year yield down to 3.62%, its lowest level in four months, significantly lower than 3.80% just a week prior. Investors’ readiness to accept decreased returns amidst ongoing inflation indicates a growing preference for safer assets.
Recent Bitcoin sales by long-dormant whales and consistent miner outflows have contributed to the negative sentiment. Nevertheless, the primary factor behind BTC’s latest decline remains the deteriorating macroeconomic outlook, prompting many traders to reduce exposure ahead of Monday’s US national holiday.
This article is for informational purposes only and should not be considered legal or investment advice. The opinions expressed are solely those of the author and do not necessarily reflect the views of Cointelegraph.
