Bitcoin extended its decline for a fourth consecutive trading session amidst a broader sell-off across cryptocurrencies, diverging sharply from the recent highs seen in global stock markets.
The digital currency dropped by up to 8.1% to reach its lowest level since February, trading around $54,190 as of 12:21 p.m. Friday in Singapore. Smaller cryptocurrencies such as Ether, XRP, and Cardano faced even steeper losses, with some falling by more than 10%.
Several factors contributed to the downward pressure on crypto markets. These include waning demand for US Bitcoin exchange-traded funds (ETFs), reports of governments selling seized tokens, and uncertainty stemming from US political developments.
Compounding these issues, administrators of the defunct Mt. Gox exchange are gradually returning a significant amount of Bitcoin to creditors, raising concerns about potential sell-offs. On Friday, a wallet linked to Mt. Gox moved $2.7 billion worth of Bitcoin, according to Arkham Intelligence.
In contrast, global stock markets, as measured by MSCI Inc., have been near record highs. The short-term correlation between Bitcoin and the MSCI global index has notably decreased, prompting questions about whether the risk aversion observed in crypto markets will spill over into broader investments after a robust first half for stocks.
Stefan von Haenisch, head of trading at OSL SG Pte, noted a subdued sentiment in crypto markets, attributing it to predominantly bearish news such as the Mt. Gox developments. He suggested that crypto markets are eagerly awaiting more accommodative monetary policies from the Federal Reserve, including potential rate cuts and balance sheet expansions.
Investors are closely watching US jobs data for clues about the Fed’s future policy direction, particularly amid recent soft economic reports that support arguments for monetary easing.
Bitcoin, which surged to an all-time high of $73,798 in March following strong demand for US Bitcoin ETFs, has since retreated due to reduced inflows, casting a shadow over the broader digital asset market. Meanwhile, approvals for inaugural US ETFs for Ether are pending, with uncertain investor interest amid ongoing crypto market volatility.
Recent days have seen significant liquidations in the crypto market, totaling over $800 million in bullish bets, among the highest since April, according to Coinglass data. Concerns about weekend liquidity exacerbating market movements have been noted, though stability could return with the re-engagement of US investors post the July 4 holiday.
Bitcoin miners, grappling with the financial impact of April’s halving event which reduced their token rewards, have been selling portions of their holdings as they approach break-even profitability thresholds.
Le Shi, head of trading at Auros, highlighted the critical price range of $51,000-$52,000 for Bitcoin, indicating it as a pivotal point for miners’ profitability calculations amidst ongoing market fluctuations.
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