Bitcoin experienced a significant decline, dropping by as much as 8.1% to its lowest point since February, settling around $54,400 by 7:20 a.m. Friday in London. Other major cryptocurrencies like Ether, XRP, and Cardano also saw notable losses, with some falling more than 10%.
The crypto market faces several challenges currently, including reduced demand for US Bitcoin exchange-traded funds (ETFs), reports of governments liquidating seized tokens, and uncertainties stemming from US political developments.
Adding to the complexity, administrators of the defunct Mt. Gox exchange are gradually returning a substantial amount of Bitcoin to creditors, raising concerns about potential market impact as these funds potentially re-enter circulation. On Friday, a wallet associated with Mt. Gox moved tokens worth $2.7 billion, according to Arkham Intelligence.
In contrast to these crypto woes, global stock markets, as measured by MSCI Inc., continue to hover near record highs. A notable trend observed is a diminishing short-term correlation of Bitcoin with traditional stock indices, prompting questions about whether recent crypto caution is an isolated event or signals broader investor wariness across markets.
Stefan von Haenisch, head of trading at OSL SG Pte, remarked on the subdued sentiment in crypto markets, attributing it to predominantly bearish news such as the Mt. Gox sell-offs.
Looking ahead, market participants are closely watching US employment data for insights into Federal Reserve monetary policy. Recent soft economic indicators have bolstered expectations of potential rate cuts and further balance sheet expansions, which some believe could provide a positive catalyst for cryptocurrencies.
Bitcoin, which soared to an all-time high of $73,798 in March fueled by robust demand for US ETFs, has since seen reduced inflows, contributing to its decline and casting a shadow over the broader digital-asset market. Approval processes for new ETFs linked to Ethereum (Ether) are ongoing, though market interest remains uncertain amid the current sell-off.
Recent market dynamics have also witnessed significant liquidations, with over $800 million in bullish crypto positions being unwound over the past three days, according to Coinglass data. Caroline Mauron, co-founder of Orbit Markets, highlighted the potential impact of such liquidations on market volatility, particularly during periods of reduced weekend liquidity.
Meanwhile, Bitcoin miners are grappling with the financial implications of April’s halving event, where the rewards for mining new tokens were reduced. This has prompted some miners to sell portions of their holdings to manage costs.
As the market navigates these complexities, the $51,000-$52,000 price range remains critical, with many miners approaching breakeven points for profitability, noted Le Shi, head of trading at Auros.
