Bitcoin Dips by 12% During Asia Selloff as US Recession Worries Intensify

• Due to recession fears in the US, bitcoin declined by more than 12% to $54,000; this led to many sales in risk assets and Bitcoin ETFs.
• Peter Schiff predicts a 15% gap down for spot Bitcoin ETFs could lead to liquidations if Bitcoin fails to rebound.
• Morgan Stanley’s upcoming approval of Bitcoin ETFs is a major industry milestone, even as market turmoil continues.

The price drop of Bitcoin was during the Asia trading hours on Monday, August 5, the price drop exceeded 12% to $54,000.Traders have been selling riskier assets as a result of the persistent fears of a US recession. Popular economist Peter Schiff predicted a tough trading session for Bitcoin ETFs on Monday.

Impact on Bitcoin and Spot ETFs

Bitcoin’s plunge under the July lows has implications. Peter Schiff believes a 15% gap down for spot Bitcoin ETFs from January levels could trigger massive liquidations. Last Friday, August 2, spot Bitcoin ETF outflows surged past $230 million amid a sharp sell-off in all three US indices. Crypto market liquidations have now hit $800 million as of Monday’s Asian trading hours.

Altcoins have not been spared. Ethereum’s price fell to $2,200 and it was decreasing by more than 30% per week. Experts have foreseen more corrections on Bitcoin as it retraced to the 200-day MA, a critical level. CryptoQuant analyst Julio Moreno warned that failing to regain the $57K support could push Bitcoin down to $40,000.

The global market turmoil continues. Japan’s Nikkei index has fallen more than 20% since its July peak, causing a sell-off in stock markets around the world. The US futures market also trades deeply down on Sunday, indicating a potential sell-off ahead. US recession and hard landing fears have increased.

Morgan Stanley’s Bitcoin ETF Approval

Meanwhile, Morgan Stanley, the largest US wealth manager, will soon allow its 15,000 financial advisors to offer Bitcoin ETFs to clients starting August 7. CNBC reported that Morgan Stanley will recommend the iShares Bitcoin Trust (IBIT) by BlackRock and the Wise Origin Bitcoin Fund (FBTC) by Fidelity. Ether ETFs and other spot crypto ETFs, meanwhile, are still pending approval.

Large financial advice businesses, known as wirehouses, have been slow to adopt spot cryptocurrency ETFs until recently. Besides Morgan Stanley, notable names like Wells Fargo, Bank of America, and JPMorgan Chase are included.

The Significance of Morgan Stanley’s Move

The threshold for accepting new financial products is high, as wirehouses oversee trillions of dollars. Kyle DaCruz, Crypto ETFs’ director of digital assets product for VanEck, said that this market segment is “a game changer” for the industry.

Morgan Stanley stands out among wirehouses. Its advisory network supervises about $3.75 trillion, including $1 trillion in independently managed accounts. Financialplanning.com reports Morgan Stanley oversees a $6.2 trillion portfolio on behalf of its clients.

Roxanna Islam, head of sector and industry research at VettaFi, noted that both wirehouses like Morgan Stanley and independent financial planners are seeing an uptake in bitcoin ETFs. Notably, IBIT (BlackRock) and FBTC (Fidelity) are prominent among these funds.