Bitcoin slipped to a 24-hour low of around $57,250 Monday morning, before staging a recovery to levels over $58,000.
Per data from CoinGecko, Bitcoin's price dropped to a low of $57,257.71 before recovering to its current price of $58,419.26, trading flat on the day and down 8.6% on the week, amid continuing outflows from investment products and a prevailing trend of declining exchange reserves.
Speaking with Decrypt, Kristian Haralampiev, Structured Products Lead at Nexo, said the sharp decline in Bitcoin prices over the past weekend can be attributed to market anxiety surrounding the upcoming release of the U.S. non-farm payroll data and its potential impact on the Federal Reserve's monetary policy.
"With the Federal Open Market Committee (FOMC) meeting looming, investors are bracing for new economic data that could significantly influence the Fed's decisions,” Haralampiev said.
The market's mixed signals are reflected in liquidation data.
According to CoinGlass, the past 24 hours saw $169.2 million in liquidations across the crypto market, with long positions accounting for $125.59 million of that total.
Outlining key factors to watch in the coming week, Ryan Lee, Chief Analyst at Bitget Research told Decrypt that the initial jobless claims data will be released this Thursday, followed by unemployment rate data on Friday.
These two data points are important indicators influencing the Federal Reserve's rate cut decision in September.
Lee also emphasized the importance of monitoring "on-chain whale activity" and "BTC ETF inflows and outflows" as potential market movers.
Investment products hit choppy waters
The market's resilience is being tested as digital asset investment products experienced a wave of negative sentiment last week.
According to a Coinshares report released Monday, digital asset investment products saw outflows totaling $305 million last week, with widespread negative sentiment evident across various providers and regions.
James Butterfill, Head of Research at CoinShares, attributed this shift to "stronger-than-expected economic data in the US, which has diminished the likelihood of a 50-basis point interest rate cut."
The outflows were particularly pronounced for Bitcoin, which saw $319 million leave investment products.
Interestingly, short Bitcoin products bucked this trend, with Butterfill noting that they saw a “second consecutive week of inflows totaling $4.4 million, the largest since March this year."
The Ethereum market is also facing challenges, with Coinshares noting that Ethereum saw $5.7 million in outflows, while trading volumes stagnated, reaching only 15% of the levels seen during the US ETF launch week.
As of Monday morning, Ethereum was trading at $2,522.45, down 0.9% over the past 24 hours and 10% over the week, per data from CoinGecko.
In a surprising twist, blockchain equities seemed to buck the negative trend, with $11 million in inflows, “notably into Bitcoin miner specific investment products,” Butterfill said.
Exchange reserves hit multi-year low
Despite these short-term investment flows, a deeper look at on-chain data reveals a potentially bullish long-term trend.
Cryptocurrency exchanges worldwide now hold just 2.39 million BTC, valued at approximately $139.86 billion, according to data from Coinglass.
This represents a significant 25% decline from their 2020 peak, when exchanges held nearly 3.2 million BTC.
A CryptoQuant analyst linked the development to the growing adoption of self-custody strategies, noting that with BTC reserves on exchanges dropping, it could "indicate reduced selling pressure, potentially favoring a bull market if demand continues to grow."