Crypto market volatility has returned, turning weekend excitement into anxiety as the new week begins, leading to another market downturn. But what triggered this latest shift?
Bitcoin has plummeted 5.7% in the past 12 hours, shedding $4,000 from $70,000 to just below $66,000 during early Asian trading on Tuesday, where it found support. Despite this decline, Bitcoin remains within a five-month rangebound channel established at the end of February. Analysts are now searching for the reasons behind this abrupt dip in market sentiment following a seven-week high.
Political Polls or US Government Actions?
On July 30, crypto trader and economist Alex Krüger observed that market prices and enthusiasm were high on Monday, driven by Trump’s speech, with Bitcoin hitting $70,000. “And then wham -5% in a straight line,” he remarked, suggesting it might be linked to Democrat presidential candidate Kamala Harris’s strong performance in the polls.
“If trying to rationalize the move, I’d say it was a partial reflection of Kamala doing very well in the polls (polls, not betting markets). The Trump trade is long Bitcoin and long small caps. The Kamala trade is the opposite.”
According to The Hill, Trump’s lead in the polls narrowed to just 1.5% on July 30, with 47.6% compared to Harris’s 46.1%.
Another factor contributing to the decline was the U.S. government moving around 29,800 BTC, worth approximately $2 billion, on July 29. This move came just days after Donald Trump stated he wouldn’t sell any of the government’s Bitcoin stash if elected. The U.S. government now holds 183,438 BTC, valued at around $12.5 billion, according to Arkham Intelligence.
Market Reactions and Analysis
In a post on X on July 30, crypto analyst “Inmortal” suggested that the dip might not be a negative development. “But, the best thing that could happen to us is more consolidation. The bigger the consolidation, the bigger the expansion.”
Developments in Crypto Markets
Total market capitalization has dropped about 4.4%, falling to $2.48 trillion at the time of writing. However, it has remained largely stable for the past five months. Ethereum fell from nearly $3,400 to around $3,260 before rebounding to reclaim $3,300 during early trading in Asia on Tuesday.
Other altcoins experienced larger losses, as usual, with significant declines for Solana (SOL), Cardano (ADA), Avalanche (AVAX), and Near Protocol (NEAR).
Conclusion
The crypto market is facing renewed volatility due to a mix of political developments and significant government actions. Investors should stay alert and prepared for potential market fluctuations as the situation continues to evolve.
