Bitcoin Plunges by 5% as CoinDesk 20 Index Drops 7% to Kick Off Asia Trading Week
The market saw a decline in the CD20 index by 7% and a 5% drop in BTC, with market uncertainty surrounding interest rates likely playing a role in the downward trend. The CoinDesk 20 (CD20), which measures the largest digital assets, started the Asia trading week on a negative note, with a 7% decrease, while bitcoin also experienced a 5% decrease amid growing expectations of a Federal Reserve rate cut in September.
Most components of the CD20 are in the red, showing more significant losses compared to bitcoin. Ether (ETH) recorded a 5.8% decline, Solana (SOL) dropped by 7.8%, and XRP fell by 7%. Data from CoinGlass indicates that there have been long liquidations amounting to $175 million within the past 24 hours.
BTC has faced a 13% decline over the past week, placing it in a similar realm as the aftermath of the FTX collapse. Strong U.S. jobs data exceeding expectations has been reported, but a rising unemployment rate has set the stage for a predicted Fed rate cut in September, as outlined in a recent note by ING.
According to ING’s James Knightley, private sector job growth has been notably weak, with only 136,000 new jobs added in June, falling below the anticipated 160,000. Various sectors such as government, education, and healthcare services contributed significantly to new job creation, while retail, temporary help, professional business services, and manufacturing experienced job losses.
Citi Research has put forth a more assertive forecast, projecting eight Federal Reserve rate cuts from September 2024 through July 2025, aiming to reduce the benchmark rate by 200 basis points to 3.25%-3.5%. Bettors on Polymarket are anticipating 1-2 rate cuts by the year’s end, with a 34% probability of one cut and a 37% likelihood of two.
Despite dovish Fed expectations, Asian stocks did not see a lift due to the European Union’s decision to impose significant tariffs on the import of Chinese electric vehicles, impacting market sentiment. In France, the recent elections saw leftists gaining more seats than the far right but falling short of a majority, potentially leading to a hung parliament, which could result in political and policy gridlock and trigger risk aversion in European markets.
