Bitcoin has experienced a fourth consecutive trading session decline, marking part of a broader cryptocurrency sell-off that contrasts with the recent record highs seen in global stocks.
The digital asset saw a significant drop, plummeting as much as 8.1% to reach its lowest point since February, trading at around US$54,190 as of 12:21 pm on Friday in Singapore. Other cryptocurrencies like Ether, XRP, and Cardano have seen even larger losses exceeding 10% in some cases.
Cryptocurrency speculators are facing various challenges currently, including reduced demand for US Bitcoin exchange-traded funds and indications that governments are liquidating seized tokens. The impact of the political landscape in the US adds further complexity to the crypto market.
Additionally, administrators of the now-defunct Mt. Gox exchange are gradually returning a substantial amount of Bitcoin to creditors. The uncertainty surrounding the potential selling of the $8 billion in Bitcoin is a concern for speculators after a Mt. Gox-related wallet transferred $2.7 billion worth of the token on Friday.
While the MSCI Inc’s global stocks index is close to a record high, the short-term correlation between Bitcoin and the index is declining. This divergence raises questions about whether the unease in the crypto market is an isolated event or a signal of cautiousness towards mainstream investments following a strong first half for shares.
Stefan von Haenisch, head of trading at OSL SG Pte, noted the current lack of excitement in the crypto markets, with most circulating news leaning towards a bearish sentiment, such as the Mt. Gox sell-off.
Moreover, investors are anticipating the latest US jobs data to gauge the Federal Reserve’s monetary policy outlook. Weaker economic reports in recent times have strengthened the case for potential monetary easing by the central bank in the upcoming months.
Bitcoin surged to an all-time high of $73,798 in March, propelled by robust demand for the debut US ETFs for the token. However, the dwindling inflows of capital have since pushed Bitcoin lower, casting a shadow over the wider digital asset market.
The approval of introductory US ETFs for the second-ranked token, Ether, is pending. However, the interest in these products may vary based on the ongoing crypto market downturn.
Liquidations worth over $800 million in bullish cryptocurrency positions have occurred in the past three days, marking one of the most substantial liquidation events since April, according to Coinglass data.
Continued challenges for Bitcoin miners, including profitability concerns around the $51,000-$52,000 range, are influencing market dynamics. Le Shi, head of trading at Auros, highlighted that many miners are approaching their break-even point, leading to potential selling pressures in the market.
