Bitcoin’s value plummets by 10%, continuing decline after worst week since FTX.
(Bloomberg) — Bitcoin is facing downward pressure due to a period of risk aversion in global markets, resulting in the largest digital asset experiencing its biggest weekly loss since the collapse of the FTX exchange in 2022.
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The original cryptocurrency plunged more than 10% at one point before slightly recovering to $54,333 as of 9:17 a.m. in Singapore on Monday. Over the course of seven days leading up to Sunday, the token saw a significant 13.1% drop, marking its most substantial decline since the time of FTX’s insolvency. Other smaller tokens like Ether and Dogecoin, a favorite among meme enthusiasts, also recorded substantial losses.
This decline coincides with a global stock market sell-off fueled by concerns about the economic trajectory and doubts surrounding the potential of artificial intelligence investments. Heightened geopolitical tensions in the Middle East have also contributed to investor unease.
Bitcoin exchange-traded funds in the US experienced large outflows on Aug. 2, the highest in about three months. The digital asset has fallen below its 200-day moving average price.
This technical chart pattern “suggests a possible further decline towards $54,000,” noted Tony Sycamore, market analyst at IG Australia Pty, in a written analysis.
Bitcoin has encountered various challenges since reaching a peak of $73,798 in March, including changing political dynamics in the US as pro-crypto Republican Donald Trump and Democratic contender Vice President Kamala Harris engage in a competitive presidential race without a clear and detailed digital asset policy.
Concerns also loom over potential government sales of seized Bitcoin and the risk of a surplus from tokens returned to creditors in bankruptcy proceedings.
Bond traders have increasingly wagered on US interest rate cuts starting in September to fuel economic growth. The recent turmoil in traditional markets “raises the likelihood of less restrictive monetary policy arriving sooner rather than later — a positive development for cryptocurrencies,” asserted Sean Farrell, head of digital asset strategy at Fundstrat Global Advisors LLC.
Bitcoin’s year-to-date gains have eased to around 25%, compared to an 18% rise in gold and a 9% climb in a global stocks index.
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