Bitcoin’s value plummeted during Asian trading hours on Monday, August 5, dropping below $50,000 before recovering to around $51,000. This decline stems from fears that the United States may be heading towards a recession.
The cryptocurrency’s price reached its lowest point since mid-February, with Bitcoin experiencing a four-day losing streak, bottoming out at $49,112, according to TradingView data.
Ethereum’s native token, Ether (ETH), also suffered, sinking to $2,060, its lowest price since January 3. Ether’s nearly 25% drop marks its worst single-day performance since May 2021.
Multiple factors, including economic uncertainties and security concerns, prompted investors to withdraw their money from these riskier assets. The sell-off was exacerbated by rumors that crypto market maker Jump Trading was offloading its assets. On-chain analyst SpotOnChain identified a wallet, purportedly belonging to Jump Trading, transferring 17,576 ETH (worth over $46 million) to centralized exchanges, signaling a potential sell-off.
This rumor triggered over $1 billion in sell-offs in the crypto futures market, with Ether seeing over $350 million in liquidated bets. Rising tensions in the Middle East and concerns over a potential US recession further drove investors to divest from risk assets, opting instead for safer investment options like bonds.
Nigeria: A Crypto Powerhouse in Africa
Nigeria has emerged as a major player in Africa’s cryptocurrency landscape. As of 2023, the country accounts for more than 66% of cryptocurrency traders on the continent. In 2020, Nigeria’s trading volume ranked third globally, behind only the United States and Russia.
Economic challenges, including a high cost of living due to failed economic policies and currency devaluation, have led many Nigerians to embrace crypto trading as a means of financial survival. This trend persists despite the Nigerian government’s stringent policies against cryptocurrency.
Recently, the government demanded $10 billion in compensation from Binance, accusing the world’s largest crypto exchange of manipulating the country’s exchange rate, leading to a 70% devaluation of the naira. The government has also banned banks and licensed financial institutions from handling any cryptocurrency transactions.
These developments highlight the volatile nature of the cryptocurrency market and its impact on global and local economies.
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