Bitcoin’s price declined for the fourth consecutive trading session amid a broad-based selloff in the cryptocurrency market, contrasting sharply with the recent record highs in global stocks.
The world’s largest cryptocurrency by market value fell 8.1% to its lowest level since February, trading at around $54,400 as of 7:20 AM on Friday in London.
Smaller cryptocurrencies like Ethereum, Cardano, and XRP also struggled to recover their losses.
Cryptocurrency speculators are currently facing several challenges, including weak demand for Bitcoin exchange-traded funds (ETFs) in the United States and signs that governments are offloading seized cryptocurrencies.
Additionally, the political volatility in the U.S. adds to the complex landscape.
Furthermore, the bankruptcy trustees of the defunct cryptocurrency exchange Mt. Gox are gradually returning a large batch of Bitcoin to creditors.
Speculators remain uncertain about how much of the $8 billion worth of digital assets will ultimately be sold. A wallet associated with Mt. Gox transferred $2.7 billion worth of cryptocurrencies on Friday, according to the analytics platform Arkham Intelligence.
Decoupling of Stocks and Cryptocurrencies
Meanwhile, the MSCI World Stock Index is hovering near a record high, while the 30-day short-term correlation between Bitcoin and the index is declining.
The current question is whether the risk aversion in cryptocurrencies is an isolated event or if it signals a cautious quarterly period for traditional investments, following the robust performance of stocks in the first half of this year.
Stefan von Haenisch, Head of Trading at OSL SG, stated, “There is a general lack of momentum in cryptocurrency markets right now. Most of the current news, such as Mt. Gox selling digital assets, tends to be bearish.”
Von Haenisch emphasized that the cryptocurrency market needs more signals of monetary easing from the US Federal Reserve, adding, “A rate cut once or twice, coupled with an increase in the Federal Reserve’s balance sheet, would be key elements that the cryptocurrency market is looking for.”
Ethereum ETFs Await Approval
Investors are awaiting the release of U.S. job data later today, seeking the latest signals on the Federal Reserve’s monetary policy outlook.
Recent weak economic data have increased the likelihood of the central bank easing monetary policy in the coming months.
Bitcoin reached an all-time high of $73,798 in March, driven by strong demand following the launch of cryptocurrency ETFs in the United States.
However, investments have since waned, causing Bitcoin’s price to decline and casting a shadow over the broader digital asset market.
Approvals for Ethereum ETFs, the second-largest cryptocurrency in the world, are still under consideration. Interest in these products may vary if the heavy selloff in cryptocurrencies continues.
