Key takeaways:
Increasing US trade deficits, executive stock sales, and struggling Chinese banks raised global investor caution.
Investors and miners continue to liquidate Bitcoin, but macroeconomic concerns prevail as the key influence.
Bitcoin (BTC) declined to its lowest point in 50 days, falling below $108,000. This significant drop surprised traders and led to $137 million in liquidations of leveraged bullish positions. The decline followed a 1.2% drop in the tech-heavy Nasdaq 100 index, fueled by mounting skepticism about the durability of growth in the artificial intelligence sector.
Market participants are now contemplating whether Bitcoin’s downturn is indicative of broader macroeconomic challenges or confined to the cryptocurrency itself.
Investor wariness increased after the US reported a 22% rise in the trade deficit for July. Imports exceeded exports by $103.6 billion, widening the gap more than economists anticipated. Reuters highlighted that trade “could significantly hinder economic growth in the third quarter.”
Major insider sales and rising bad debt from Chinese banks escalate risk
X user Malone_Wealth noted that the top 200 stock trades by executives, directors, and major shareholders last week were exclusively sales, which he termed unprecedented in his lifetime. Insider activity is typically tracked through disclosures to the US Securities and Exchange Commission.
Significant 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 large activities came from Dutch Bros’ Travis Boersma at $81.5 million and Klaviyo’s Andrew Bialecki at $73.7 million.
Additional concerns arose from China after the nation’s five largest banks reported historically low margins and increasing delinquencies, as reported by the Financial Times. Chinese retail banks wrote off $5.2 billion in bad debt during the first quarter, an eightfold rise from the previous year, according to the Banking Credit Asset Registration and Transfer Center.
Worries deepen in the AI sector as Nvidia and SMCI stocks falter
The AI sector has also increasingly become a point of concern. Nvidia (NVDA) reportedly disclosed that 44% of its data center revenue originated from just two clients. Despite announcing robust quarterly results on Wednesday and third-quarter revenue guidance in line with expectations, NVDA shares dipped 4.7% over two trading sessions.
Meanwhile, Super Micro Computer (SMCI) cautioned on Thursday that issues in its financial reporting could affect its ability to release results. The $25 billion firm, a key Nvidia partner providing high-performance AI servers and data center infrastructure, saw its stock fall by 5.1% on Friday.
Related: Bitcoin trend reversal to $118K or another drop to $105K–Which comes first?
Signs of risk aversion were also apparent in the bond market. The demand for US Treasurys caused the 2-year yield to drop to 3.62%, its lowest level in four months, significantly down from 3.80% just a week prior. Investors’ readiness to accept lower returns despite ongoing inflation indicates a growing preference for safety.
Recent Bitcoin sales by long-dormant whales and consistent miner outflows have contributed to the negative sentiment. Nevertheless, the primary factor behind BTC’s recent decline remains the deteriorating macroeconomic landscape, with many traders choosing to minimize exposure ahead of Monday’s US national holiday.
This article is for general informational purposes and is not intended and should not be considered as legal or investment advice. The opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.
