Why is Bitcoin Price Going Down Today?

Bitcoin (BTC) posted its worst 24-hour performance since the Aug. 5 global market rout, despite traders’ long-term optimism that its price will rally if the Federal Reserve cuts interest rates in September 2024.

The leading cryptocurrency dipped by over 6% in the last 24 hours to below $58,500. At its worst during the said decline, its price was changing hands for about $58,000.

Why is Bitcoin Price Down A Lot?

The Bitcoin price decline appears to have been orchestrated by whales, which may include individuals or larger institutions, some of those who trade BTC using over-the-counter (OTC) desks.

Bitcoin Whales Are Dumping

On-chain data by Glassnode reveals a huge dip in the number of Bitcoin held by OTC desks, showing that over 1,000 BTC (worth over $60 million) have left their addresses since Aug. 27. Historically, dips in OTC Bitcoin balances have largely coincided with BTC price drops, as shown below.

The data accompanies reports of whales transferring massive amounts of Bitcoin to exchanges. For instance, Whale Alert identified a whale that transferred 2,300 BTC, valued at approximately $141.81 million, to the Kraken exchange just before the ongoing Bitcoin price decline.

According to Arkham Intelligence, the whale still holds a substantial reserve of 18,141 BTC, worth around $1.07 billion, raising further selloff risks if the demand remains weaker on the other end.

Bitcoin Profit-Taking Ramps Up

Moreover, such large BTC transfers to crypto exchanges, especially after Bitcoin rebounded from its Aug. 5 lows of around $49,575 to as high as $65,100, suggest some large traders are securing short-term profits.

That is further visible in the recent dip in Bitcoin’s on-chain metric tracking addresses for unrealized profit and losses.

Historically, such dips have coincided with the formation of Bitoin’s local tops, as shown above. In detail, when the Bitcoin NUPL reaches the belief (green) and optimism (yellow) stage, it follows deeper price corrections.

Why Are Bitcoin Traders/Investors Booking Profits?

Bitcoin traders are security profits ahead of a flurry of key economic data, namely the U.S. Personal Consumption Expenditures (PCE) on Aug. 30 and Nvidia earnings on Aug. 28.

PCE Data and Its Impact on Bitcoin

The Federal Reserve, Chair Jerome Powell, has already hinted at a possible dovish shift in its monetary policy, potentially cutting interest rates in September 2024. However, the central bank’s final decision will depend heavily on the PCE data.

If the reports suggest that inflation remains stubbornly high, it could dampen risk appetite. Today’s Bitcoin losses stem from the same fears, with traders locking short-term profits in case none are left after the PCE report is released.

Nvidia Earnings Are Setting Risk Mood Today

All eyes are on Nvidia, the $3.2 trillion semiconductor giant, preparing to unveil its earnings report after the U.S. markets close on August 28. Analysts anticipate a remarkable 70% revenue growth for the quarter, fueled by booming demand in the artificial intelligence sector.

In 2024, Nvidia’s stock surged by an impressive 160%, contributing approximately 30% of the overall gains in the Nasdaq 100, a key U.S. stock market index.

This significant rally has strengthened the correlation between the Nasdaq 100 and Bitcoin, particularly as the 30-day average correlation between the two increased in August.

As a result, the cryptocurrency market, including leading assets like Bitcoin, has begun to mirror the Nasdaq’s fluctuating trends, largely influenced by the anticipation surrounding Nvidia’s earnings report.

Where is Bitcoin Price Heading Next?

Technically, Bitcoin’s price decline is part of a breakdown move emerging from its prevailing rising wedge pattern. FX Empire has discussed this bearish setup in depth in the analysis below. Please watch to determine the next potential price targets for September.