Bitcoin, the world’s most dominant cryptocurrency, plunged from around $29,000 a coin amid rising global uncertainty surrounding interest rates.

The catalyst for this disruption was the emergence of discussions surrounding prolonged higher interest rates, which ignited a sell-off of risk assets such as Bitcoin.

The consequence was a flurry of mass liquidations of bullish positions, sending shockwaves throughout the digital currency space.

Bitcoin, which had been hovering near the $29,000 mark, experienced a drastic plunge to as low as $25,314 within a mere 24-hour interval. Even though rebounded modestly during early European trading on Friday, the toll of this tumultuous episode was evident with over $1 billion worth of positions unwound during the selloff as reported by Coinglass data.

Despite the setback, Bitcoin remains notably resilient, maintaining a position 60% higher than its year-start value.

A pivotal focus for crypto traders now centers on the critical $25,000 level for Bitcoin. Should this level be breached, the positioning of options suggests the potential for a cascading effect of liquidations, further amplifying the impact.

Market analyst Josh Gilbert from the trading and investment firm eToro emphasized the significance, stating, “With limited catalysts to push Bitcoin higher in the short term, a fall below $25,000 could put bears in charge, and if the rout in global risk assets continues, Bitcoin could face further downside.”

Sentiment also felt the weight of a Wall Street Journal report indicating that Elon Musk’s SpaceX had divested its Bitcoin holdings following a $373 million write-down. The timing of SpaceX’s Bitcoin sale, however, remained unclear according to the Journal report.

After a three-week period of relative stagnation, the cryptocurrency market is showing renewed signs of life with a surge in fund inflows, most of which are pouring into Bitcoin (BTC).

This resurgence in interest comes hot on the heels of the release of July’s inflation figures, which were pleasantly surprised by exceeding expectations,  Investors King gathered.

Bitcoin Sees Inflows, Reversing Previous Trend
CoinShares, a leading digital asset tracking platform, published its weekly report on crypto fund flows, revealing a total of $28.5 million pouring into these funds in the past week.

A substantial chunk of this influx, around $27 million, found its way into Bitcoin. This marks a significant shift from the previous three weeks during which Bitcoin had faced net outflows of approximately $144 million.

Among other digital assets, Ethereum (ETH) and XRP also saw modest inflows, receiving $2.5 million and $0.5 million, respectively. Notably, XRP has now experienced sixteen consecutive weeks of inflows, witnessing a remarkable 127% growth in assets under management since the start of the year.

Market Sentiment Improves Post-Inflation Data
Experts at CoinShares attribute this improved market sentiment to recent US inflation data, which turned out to be slightly better than anticipated. This data point signifies that the possibility of a rate hike in September has diminished, contributing to a more favorable outlook for cryptocurrencies.

Federal Reserve’s Impact on Crypto Market
The decline of Bitcoin and other digital assets throughout the preceding year can be largely attributed to the aggressive rate hike strategy implemented by the Federal Reserve. The central bank took swift measures to curb soaring inflation, resulting in consistent downturns in the cryptocurrency market.

As the year progresses and the Consumer Price Index (CPI) retracts to a 3.2% year-over-year growth rate, indications suggest that the Federal Reserve’s rate hike campaign might have peaked. This development could indicate an opportune moment for investors to enter the market. According to the CME FedWatch Tool, market expectations indicate an 88% likelihood that the Federal Reserve will maintain interest rates at 5.25% during its upcoming September meeting.

ETF Enthusiasm Fuels Canadian and Swiss Inflows
The Bank of Canada, closely aligned with the Federal Reserve’s policies, is also anticipated to maintain a steady 5% interest rate until the year’s end. Notably, the majority of last week’s crypto inflows, amounting to $24 million, were directed towards Canada’s Purpose ETF, the world’s pioneering Bitcoin spot ETF.

Switzerland also witnessed substantial inflows, totaling $7.9 million. The excitement surrounding the potential approval of a US Bitcoin spot ETF began gaining momentum in June, stimulated by filings from major players like BlackRock and Fidelity. This excitement had a palpable impact on the cryptocurrency market, propelling Bitcoin above the $30,000 mark and resulting in consecutive weeks of substantial fund inflows amounting to $742 million.

Prospects of Bitcoin ETF Approval
Bloomberg’s ETF analysts currently assign a 65% likelihood of a Bitcoin spot ETF gaining approval in 2023, further bolstering expectations of positive market developments.

In a recent “ask me anything” session on Twitter, Binance CEO Changpeng “CZ” Zhao shared his insights on various topics, including the next bull run for Bitcoin (BTC), BlackRock’s foray into the crypto market, and the ongoing regulatory actions against his exchange.

With his finger on the pulse of the industry, CZ delivered his prediction for the future of Bitcoin.

CZ highlighted the historical pattern of Bitcoin’s price movements, observing that the cryptocurrency tends to follow four-year bull cycles. Based on this trend, CZ speculated that the next bull market would likely occur in 2025, the year following the anticipated Bitcoin halving event in 2024.

While acknowledging that he couldn’t predict the future with certainty, CZ expressed confidence in this cyclical nature of Bitcoin’s growth.

Addressing concerns about BlackRock’s entry into the spot Bitcoin exchange-traded fund (ETF) arena, CZ greeted the development with enthusiasm, considering it a significant benefit for the entire crypto industry.

Despite apprehensions raised about the traditional finance giants encroaching on the decentralized ethos of Bitcoin, CZ reassured that the overlap between Binance’s customer base and that of BlackRock would be minimal.

He emphasized that newcomers to the crypto space would introduce additional users, ultimately expanding the overall adoption of cryptocurrencies.

CZ’s positive outlook stemmed from the rising institutional interest in Bitcoin and the impending halving event, both of which are expected to fuel higher trading volumes. Binance aims to be well-prepared to accommodate this surge in activity over the next eighteen months, capitalizing on the increased institutional involvement.

These statements from CZ emerged shortly after BlackRock CEO Larry Fink made favorable comments about Bitcoin, recognizing it as an “international asset” capable of serving as a hedge against inflation and the devaluation of fiat currencies.

Turning to the topic of regulatory action against Binance, CZ acknowledged the ongoing challenges but emphasized his commitment to finding expedient and mutually agreeable solutions. While he refrained from divulging specific details, CZ expressed a desire to navigate the regulatory landscape effectively, demonstrating his dedication to compliance and building a sustainable future for the exchange.