Bitcoin tumbled over 10 per cent at one point, before bouncing to trade at $54,333 at 9.17 am in Singapore on August 5, Bloomberg reported. The digital currency in fact had its worst week since the FTX collapse shook crypto markets in 2022, losing 13.1 per cent over the past seven days, it added.
The world’s largest cryptocurrency is under pressure due to risk aversion in global markets, and even smaller tokens such as Ether and meme-themed Dogecoin sank under “heavy losses”, the report said.
Ether slid to its weakest since mid-January and was last down 16 per cent at $2,300, Reuters reported.
Concerns Over Economic Outlook, AI
According to Bloomberg, growing concerns around the global economic outlook and questions of a possible bubble created by heavy investments into artificial intelligence (AI), have pushed global stock selloffs and impacted the crypto side as well.
Further, markets have displayed “skittishness” given the tense geopolitical situation in the Middle East, and while they await the United States Federal Reserve’s (Fed) upcoming policy meet outcome.
Bond traders have amplified bets on US interest-rate cuts beginning in September to support economic expansion. The volatility in stock markets has “increased the likelihood of less restrictive monetary policy coming sooner rather than later — a good thing for crypto,” Sean Farrell, head of digital-asset strategy at Fundstrat Global Advisors LLC told Bloomberg.
Bitcoin’s Position
In the US, Bitcoin exchange-traded funds (ETFs) saw their largest outflows in around three months on August 2. Its moving average price also slumped, with Tony Sycamore, market analyst at IG Australia Pty, noting that the technical chart pattern “opens the way for a deeper pullback” toward $54,000.
The token hit a record $73,798 high in March 2024, but has since been pulled back by various factors including uncertainty ahead of the US presidential elections race in November. Notably, Republican candidate Donald Trump has positioned himself as “pro-crypto”, while opponent and Democratic nominee Kamala Harris has yet to outline her policy stance on digital assets, Bloomberg report said.
The cryptocurrency is off nearly 20% from its March 2024 high, as per the Reuters report.
Also hanging over the market are possible sales of Bitcoin seized by governments and the risk of a supply overhang from tokens returned to creditors through bankruptcy proceedings.
Bitcoin is still a lucrative investment. Its year-to-date (YTD) advance has moderated to around 25 per cent, compared with gold’s 18 per cent ascent and a 9 per cent climb in global stocks, the Bloomberg report added.
(With inputs from Bloomberg and Reuters)
