Cryptocurrencies took a shocking mid-afternoon dip recently, turning an otherwise peaceful day into a tempest. Among the biggest losers in this sudden shakeup, counted by a 1.3% downturn in the CoinDesk Market Index, were altcoins like Ripple’s (XRP), Dogecoin (DOGE), Polkadot’s (DOT), Polygon’s (MATIC), and Uniswap’s (UNI). Each of these experienced more than 4% losses within a mere 24 hours. Cryptocurrency giants bitcoin (BTC) and ether (ETH) fared slightly better, managing to limit declines under 1%.
This unexpected downturn could possibly be linked to macroeconomic tremors, result of a stronger-than-anticipated U.S. retail sales report for July. The Atlanta Fed’s GDPNow model, taking retail sales data into account, predicts an impressive 5% U.S. GDP growth in the third quarter, far from an economy that would need the Fed to stop interest rate hikes, let alone consider rate cuts.
Ed Moya, OANDA Senior Market Analyst, disclosed to CoinDesk, “Cryptos are sinking as the bond market selloff resumes, sending global bond yields higher as the risk of more central bank tightening grows.” The recent economic buoyancy seems to have quashed hopes of the anticipated easing of financial tightening arriving soon.
Not only cryptocurrencies felt the pinch. The Nasdaq, S&P 500, and Dow Jones Industrial Average each succumbed to more than 1% losses following the economic update, with the 10-year and 30-year U.S. Treasury rates escalating to fresh 2023 highs.
Yet, cryptocurrency, though rocked, has shown a semblance of solidity in 2023, despite continuing bear market circumstances. Prices and trading activity remain subdued. Earlier, the Block reported top-level exits at market maker GSR, including the CFO, Jonathan Hugh. Responding to these changes, a GSR spokesperson commented, “Our business operations and strategy have naturally evolved to respond to changing market conditions.” This follows a 10% staff cut at the company last October, a clear sign of major reshuffling in the crypto landscape.
This volatile incident reminds us to remain cautious in the face of fluctuating economic landscapes, underlining that navigating the cryptocurrency market successfully requires a blend of insight, adaptability and resilience, particularly in moments of unexpected downturns.
Source: Coindesk
