Markets
Bitcoin records biggest drop in two months as liquidations resume
(Bloomberg) — Losses are piling up in the crypto market after its second-worst weekly decline of 2024, a reflection of slowing demand for Bitcoin exchange-traded funds and uncertainty over monetary policy.
Most read on Bloomberg
Bitcoin lost as much as 8.1% to $58,528 on Monday, the biggest intraday decline since April 13. The leading token by market value has been rocked by two weeks of releases of exchange-traded products containing the cryptocurrency. More than $210 million in bullish crypto bets have been liquidated in the past 12 hours, according to data compiled by tracker Coinglass.
A gauge of the 100 largest digital assets fell about 5% in the seven days to Sunday, the steepest decline since April, according to data compiled by Bloomberg.
Adding to fears of increased selling pressure, the rehab administrator of Mt. Gox – the Japanese crypto exchange that was hacked over a decade ago – announced it would begin Bitcoin redemptions and Bitcoin Cash in July.
“Given the Mt Gox announcement, it appears that some market participants are going short,” Stefan von Haenisch, head of trading at OSL SG Pte. “Cryptocurrency markets are struggling to capture supply at the moment.”
The cracks in crypto come amid doubts about the Federal Reserve’s ability to quickly cut interest rates from their highest level in two decades. For some analysts, the decline in digital assets is a harbinger of a broader risk appetite.
Current crypto market dynamics are “characterized by low volatility, low volumes, and unbalanced order books as prices begin to move towards the limits of their range,” wrote David Lawant, head of research at FalconX, in a note.
The declines in some corners are particularly notable: the streak of weekly declines for Ether and Solana are the longest since last year and 2022 respectively.
And this, even as fund companies prepare to launch the first American ETFs investing directly in Ether, the second largest crypto-asset. Solana, on the other hand, was very recently a favorite of various digital asset hedge funds.
Bitcoin hit a record high of $73,798 in March, but has lagged traditional investments such as stocks, bonds and gold this quarter. The 200-day moving average at around $57,500 is now in focus as a possible area of support for the price, according to Tony Sycamore, market analyst at IG Australia Pty.
The story continues
“A bearish mood seems to be setting in,” said Caroline Mauron, co-founder of digital asset derivatives liquidity provider Orbit Markets. “The market is having difficulty digesting large sell orders.”
Bitcoin investment products saw outflows of around $600 million for the second week in a row, the largest in a two-week period since the United States approved exchange-traded funds to hold the largest cryptocurrency in January.
Overall, digital asset products saw outflows of $584 million in the week ended June 21, according to data from CoinShares International Ltd. Bitcoin products accounted for the majority, with $630 million in outflows following another $600 million the previous week.
–With help from Suvashree Ghosh and Benjamin Taubman.
Most read from Bloomberg Businessweek
©2024 Bloomberg LP