Bitcoin, the leading cryptocurrency, experienced a fresh two-month low on Friday as it broke free from its recent range due to a surge in risk-averse sentiment sweeping through global markets.
In a substantial one-day drop reminiscent of the November 2022 crash during the FTX exchange collapse, bitcoin’s value plummeted by 7.2% on Thursday.
The descent continued into Asian trading hours on Friday, hitting a low of $26,172 – the lowest mark since June 16. However, by 0835 GMT, a partial recovery brought it to $26,441, indicating an overall 0.8% decline for the day.
Thursday evening witnessed a steep slip of around 9%, with bitcoin’s value resting just above the $26,000 mark. The most recent trade data from Coin Metrics recorded the cryptocurrency at $26,593.68, marking an 8% decrease.
This decline followed a report in The Wall Street Journal which revealed that SpaceX, under Elon Musk’s leadership, had written off $373 million from its bitcoin holdings across 2021 and 2022, ultimately liquidating the digital assets.
Analysts attributed this sharp fall to an “Elon Musk/SpaceX-driven selloff,” suggesting that the nature of the decline was reactionary and skewed towards retail investors. You may also read Bernstein Family Defends Bradley Cooper’s Portrayal in “Maestro” Biopic Amidst Controversy.
Recalling events from 2022, Tesla, also led by Elon Musk, initially invested $1.5 billion in bitcoin and witnessed a 15% surge in bitcoin’s value in a single day following Musk’s announcement. However, the situation reversed after Musk abandoned the plans a few months later.
Since then, Tesla’s bitcoin holdings have experienced fluctuations, including $204 million in impairment losses. You should also check Browns and Eagles Battle to a Thrilling Tie at Lincoln Financial Field.
The recent roller-coaster in bitcoin prices aligns with a challenging period for the digital currency sphere, as U.S. regulators intensify scrutiny on a sector that SEC Chair Gary Gensler describes as “rife with fraud, scams, and abuse.”
According to John Todaro of Needham, the return of bitcoin to the $30,000 mark in late June lacked substantial momentum. The anticipation of a spot bitcoin Exchange-Traded Fund (ETF), previously a major positive catalyst for the market, also experienced a slowdown in momentum.
Todaro attributes the market pullback to factors like the delayed decision on the U.S. spot bitcoin ETF and expectations of prolonged higher interest rates.
Market analyst Tina Teng from CMC Markets posits a different perspective, linking the sell-off to the recent rise in government bond yields. Increasing bond yields typically signal reduced liquidity in broader markets, which could have negatively affected cryptocurrencies like bitcoin.
Teng also mentioned that while the Evergrande crisis might have indirectly influenced bitcoin’s price, it wasn’t a primary cause for the decline. The Evergrande crisis primarily impacts investor sentiment towards the Chinese economy rather than directly impacting cryptocurrency values.
As bitcoin navigates these challenges, the crypto community’s eyes are on the upcoming Halving expectations in Q1-Q2 ’24 and ongoing commentary from the SEC regarding ETF developments.
