On Aug. 5, U.S. Bitcoin and Ethereum ETFs saw massive trading volumes. Spot Bitcoin ETFs alone ended up registering $5.70 billion in volume. The crypto market downturn led to Bitcoin briefly dipping below $50,000 before rebounding, and now, analysts are divided on Bitcoin's short-term recovery prospects. Some predict a potential recovery, while others believe it is very likely that BTC's price could still drop to as low as $40K. Donald Trump advised the current administration against selling U.S. Bitcoin holdings as well, while Swan Bitcoin canceled its Pacific Bitcoin Festival.
Crypto ETFs See Massive Trading Volumes
On Aug. 5, the United States Bitcoin and Ethereum ETFs experienced almost $6 billion in trading volume during the market turmoil. Data from CoinGlass indicated that spot Bitcoin ETFs alone registered a daily volume of $5.70 billion. BlackRock’s iShares Bitcoin Trust (IBIT) ended up contributing more than half of this figure.
Spot Ether ETFs saw a trading volume of $715.5 million, predominantly driven by Grayscale’s Ethereum Trust (ETHE) and BlackRock’s iShares Ethereum Trust (ETHA). This brought the total volume across the two crypto ETF categories to $6.42 billion.
Bloomberg ETF analyst Eric Balchunas stated on social media that "crazy volume" during a market downturn is often a reliable indicator of fear. However, he also pointed out that deep liquidity on bad days is advantageous for traders and institutions as these large volumes are beneficial in the long term.
The crypto market downturn started on Aug. 4 after reports started spreading that Jump Trading started moving very large amounts of ETH to exchanges. The sell-off intensified with declines in the Nikkei and the unwinding of the Japanese yen carry trade, causing Bitcoin to briefly dip below $50,000 at the start of US trading hours on Aug. 5. Despite this, BTC’s price has rebounded slightly and is trading hands above $55,700 at press time.
Bitcoin ETF Flow (Source: Farside Investors)
Preliminary daily inflow data from CoinGlass shows varied results across Bitcoin and Ethereum ETFs. The Grayscale Bitcoin Trust and ARK 21Shares Bitcoin ETF (ARKB) each recorded outflows of $69 million, while the Bitwise Bitcoin ETF (BITB) and the Grayscale Bitcoin Mini Trust saw inflows of $2.9 million and $21.8 million, respectively.
Ethereum ETF Flow (Source: Farside Investors)
The Grayscale Ethereum Trust experienced outflows of $46.8 million, whereas Bitwise and Franklin Templeton’s ETFs reported inflows of $7.2 million and $900,000, respectively. Bloomberg ETF analyst James Seyffart predicted that Bitcoin ETFs would ultimately end up with net inflow once all the data is finalized.
Bitcoin's Drop Sparks Mixed Analyst Opinions
Unfortunately, the market turmoil might not be over yet. Bitcoin tumbled below $50,000 on Aug. 5, and has dropped by almost 31% over the past three days in what some analysts are calling a “once in a 7-10 year event.”
This sharp decline has led to more than $500 billion being wiped out of the crypto market in just 24 hours and the liquidation of many leveraged positions. According to Coinglass, approximately $1.08 billion worth of leveraged positions were liquidated across derivatives markets, with long liquidations accounting for 74% of this total. Specifically, $404.63 million worth of Bitcoin positions were liquidated, with $282.81 million being long liquidations.
Total crypto liquidations Aug.5 (Source: Coinglass)
Now, the market is divided on whether Bitcoin will recover in the short term. The current price correction happened in the middle of weak US economic and jobs data from Aug. 2 that sparked recession fears, along with rising tensions in the Middle East.
Analysts from QCP questioned whether the market has been hit by a perfect storm. Independent trader Bob Loukas referred to this event as a “once in a 7-10 year event,” and even suggested that the correction might continue until mid-September, but may eventually look like a deeper cycle pullback.
Analyst McKenna warned investors against expecting a sharp recovery, and predicted that the market could move sideways for 1-2 months and enter an accumulation phase. Michael van de Poppe of MN Capital stated that the ongoing correction could either mark the cycle’s bottom or trigger a serious crisis. According to Van de Poppe, Bitcoin could rise sharply in a V-shaped recovery, potentially retesting the $70,000 level.
People are also speculating on how low Bitcoin’s price might go before a trend reversal. CryptoQuant founder Ki Young Ju set a lower target in the $45,000 to $55,000 demand zone, which is the cost basis of mining companies and Binance traders. If the price drops below this demand zone, it could confirm a bear market.
Analyst Scott Melker suggested Bitcoin’s price might drop below $45,000 before September. Traders on Polymarket also believe this is possible as they gave it a 45% chance of happening.
Trump Warns Against Selling U.S. Bitcoin Holdings
In a recent interview with streamer and influencer Adin Ross, former president and 2024 presidential candidate Donald Trump advised against selling the United States' Bitcoin holdings. According to Trump, if the U.S. does not innovate in the digital asset space, other countries, like China, will take the lead.
Fred Thiel, chairman and CEO of Bitcoin mining company Marathon Digital (MARA), is very optimistic that the Bitcoin mining industry will flourish under a Trump administration. Thiel’s views were supported by Jason Les of Riot Platforms, who doubted that a potential Harris administration would differ much from Biden's policies.
Trump's remarks on the necessity of investing in energy infrastructure to support future industries like Bitcoin mining and AI data centers were echoed by industry analysts and spokespeople, who see these investments as crucial for strengthening the energy grid.
Trump also proposed using Bitcoin to help pay off the U.S. government's $35 trillion national debt. He suggested that the supply-capped nature of Bitcoin could appreciate against the inflating U.S. dollar, gradually transitioning the country’s wealth to a more stable and mathematically constrained monetary system, which could potentially prevent an economic collapse.
Swan Bitcoin Cancels Pacific Bitcoin Festival
Meanwhile, Swan Bitcoin has canceled its planned crypto conference, the Pacific Bitcoin Festival, which was scheduled to take place in Santa Monica, California, from Oct. 18 to 19. CEO Cory Klippsten announced the decision on Aug. 5, and stated that the company's current focus on its core business and a recent staff reduction. The event was canceled roughly two months before it was set to start.
Klippsten previously announced in July that Swan Bitcoin abandoned its plans for an initial public offering and shut down its crypto mining arm, leading to staff cuts across multiple functions. Despite canceling the festival, Klippsten mentioned that the firm will host a smaller one-day event on Oct. 17 and plans to return with a full conference in 2025.
This announcement was made not long after the recent Bitcoin 2024 conference in Nashville, one of the largest cryptocurrency conferences in the United States. The Pacific Bitcoin Festival was expected to feature speakers like Bitcoiner Max Keiser, who is known for promoting Bitcoin adoption in El Salvador, and Marathon CEO Fred Thiel.
