This is why Bitcoin has dropped below $62,000.

Bitcoin (BTC)'s attempt at a modest rally during US trading hours on Friday was quickly interrupted. The largest cryptocurrency experienced a sharp drop, falling below $65,000 to $62,000.

This sudden drop triggered a wave of liquidity, with $290 million lost in long and short positions over the past 24 hours.

Bitcoin sinks below $62,000

A recovery rally ahead of the FOMC meeting and positive July CPI data fueled bearish sentiment. However, the long-awaited price reduction has been delayed, with the next decision in September. As a result, the excitement in the crypto market quickly subsided, leading to volatile events.

A weak US jobs report for July, released last Friday, sent bond yields and the dollar lower. Normally, such a scenario would include risk assets like stocks and Bitcoin, but not this time. Initially, Bitcoin made small gains, climbing above $65,000. However, it soon fell victim to the broader risk, falling below $62,000.

“Bearish macro sentiment stemming from a high unemployment print weighed heavily on crypto in anticipation of a recession on the way. The VIX crossed above 28, the highest print since the regional banking crisis on March 23,” QCP Capital analysts wrote.

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Adding to the bearish momentum, Genesis Trading transferred more than $1.5 billion in Bitcoin and Ethereum. This move caused BTC to fall by 2.2% and ETH to register a correction of 2.5% in one hour. The transactions, which include 16,600 BTC and 166,300 ETH, may result in in-kind payments to creditors.

Both mainstream and emerging digital assets have been affected during this market turmoil. Data from CoinGlass showed Bitcoin was the hardest hit, with a total of $87.27 million in outflows. Ethereum and Solana (SOL) followed with $80.21 million and $20.86 million in liquidation.

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This development follows several supply shocks to the crypto market. In early July, the German government sold 50,000 BTC. Additionally, from the bankrupt exchange Mt. Gox distributions have begun, and a sale of the US government's Bitcoin stash is underway. Recent actions with Genesis add to the ever-increasing pressure downwards.

The outflow from Bitcoin exchange-traded funds (ETFs) further complicates the market situation. Total net inflows on Aug. 2 were $237 million, according to SoSoValue. Grayscale ETF GBTC saw $45.94 million in one-day outflows, Fidelity ETF FBTC had a net outflow of $104 million, and BlackRock ETF IBIT experienced one-day inflows of $42.81 million.