The price of Bitcoin saw a notable decline today, plummeting to around $56K, though lower than the massive price crash observed in the traditional market.
On Tuesday, the U.S. Department of Justice issued a subpoena to chipmaker Nvidia, sending shockwaves through Wall Street. As a result, Nvidia’s stock price crashed by 10%, leading to a broader market selloff that caused the S&P 500 to drop by 2.16%.
This marked one of the worst-performing days of 2024, driven primarily by the decline in large-cap tech companies. However, Bitcoin saw a less severe price drop than last month, when the stock market also crashed.
Bitcoin Volatility in August and September Compared
During the August 5 market crash, Bitcoin displayed significant volatility alongside traditional markets, crashing to $49K. The S&P 500 fell by 3.00%, while Bitcoin experienced a much sharper decline of 7.16%.
This indicated that Bitcoin was closely tracking the stock market at that time, reacting more dramatically to market turbulence. Investors viewed this as a sign that Bitcoin was still deeply influenced by broader economic conditions despite being a decentralized asset.
However, by September 3, a shift in Bitcoin’s market behavior was observed. The S&P 500 recorded another significant drop of 2.16%, but Bitcoin’s response was more muted, with only a 1.82% decline.
In particular, Bitcoin stayed above its previous lows from August, suggesting that the crypto’s correlation with traditional equities may be weakening. This relative stability in the face of stock market losses hinted at Bitcoin’s growing resilience amid broader market fluctuations.
📉 The S&P 500 had its third worst performing day of 2024 today. However, Bitcoin did not see nearly as significant of a drop as the August 4th bloodbath:
😬 August 4th: S&P 500 -3.00%, BTC -7.16%
😏 September 3rd: S&P 500 -2.16%, BTC -1.82%This is a promising sign that crypto… pic.twitter.com/P0SnJaySn8
— Santiment (@santimentfeed) September 3, 2024
Diverging Performance Observed Previously
In July, Bitcoin and the stock market diverged sharply. While Bitcoin hit a four-month low on July 11, dropping 13.22% and dragging the global crypto market cap to $2.17 trillion, U.S. equities surged. The NASDAQ Composite rose 7.57% and the Dow Jones by 2.34%.
This decoupling was driven by unique selling pressures in the crypto market, wherein the German government dumped about $3 billion in Bitcoin on the open market.
Meanwhile, U.S. stocks benefited from a strong jobs report and optimism for rate cuts, contrasting sharply with Bitcoin’s decline.
Bitcoin Traders’ Liquidation Risk
Citing data from Coinglass, popular crypto analyst Ali Martinez highlighted that $246.64 million in leveraged positions are at risk of liquidation if Bitcoin drops below $56,840.
As of the latest data, Bitcoin has already fallen below this critical level, raising concerns about potential further liquidations.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
