Nansen’s Weekly Report Examines Crypto Black Monday and Economic Concerns

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Hongji Feng

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Hongji Feng

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Hongji is a crypto and tech reporter. He graduated from Northwestern University's Medill School of Journalism with a Bachelor's and a Master's. He has previously interned at HTX (Huobi Global),...

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August 5, 2024 17:59 EDT

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Nansen’s latest report examines the massive sell-off of crypto assets during Crypto Black Monday, highlighting key factors driving the downturn.

At the time of writing, all the top cryptocurrencies ranked by market capitalization have encountered a deep decline within the past 24 hours except the stablecoin Tether (USDT), based on statistics provided by CoinMarketCap.

According to Nansen’s report, the latest market volatility on August 5 is attributed to a “U.S. growth scare” and several other factors, including the narrowing lead of Trump in election polls and the Bank of Japan’s policy normalization.

wen stop? pic.twitter.com/5prCr7bxu3

— Nansen 🧭 (@nansen_ai) August 5, 2024

Crypto Black Monday Strikes Market Hard

Bitcoin, for instance, is down by 19.91% in a week. The price of Bitcoin briefly fell below the $50,000 mark and dropped to as low as $49,513.

The market research demonstrated that the “U.S. growth scare” has created uncertainty among investors, leading to a reevaluation of risk assets, including cryptocurrencies.

This concern about economic growth prospects in the U.S. has been compounded by Donald Trump’s narrowing lead in the presidential election polls, introducing additional political risk into the markets.

Additionally, the Bank of Japan’s shift towards policy normalization has impacted global markets, influencing investor sentiment and contributing to the sell-off.

The report suggested that the increased probability of a recession, combined with high implied volatility, warrants a cautious approach. It recommended that investors consider trimming risk allocations rather than increasing them, taking advantage of price recoveries to reduce exposure prudently.

Bitcoin Sees Over $1 Billion in Liquidations

Since Bitcoin’s price dived, total liquidation has exceeded $1 billion, and the Crypto Fear & Greed Index has decreased to 26, a tremendous difference from the Index of 74 from the previous week.

Bitcoin (BTC) is currently trading at $54,462, with Ethereum (ETH) at $2,439, BNB at $465, Solana (SOL) at $132, and Ripple (XRP) at $0.49.