Bitcoin fell for the fourth straight session of trading, part of a broader cryptocurrency sell-off that contrasted with recent record highs in global stocks.
Bitcoin has fallen as much as 8% in the last 24 hours to its lowest level since February, where it is trading at around $54,000. While other digital currencies, such as Ethereum, XRP, Cardano, Solana, and Binance Coin, suffered greater losses, in some cases exceeding 10%.
Cryptocurrency speculators are currently facing a host of challenges, including declining demand for US bitcoin exchange-traded funds and signs that governments are disposing of seized cryptocurrencies.
Moreover, officials of the collapsed Mt.Gox exchange are returning a large amount of Bitcoin to creditors in phases worth up to $8 billion. While speculators are not sure how much of this amount will eventually be sold. A wallet linked to Mt.Gox sold $2.7 billion worth of Bitcoin on Friday, according to Arkham Intelligence.
Crypto and stocks
Meanwhile, MSCI's gauge of global stocks is hovering near a record high, and the 30-day short-term correlation between Bitcoin and the index is falling. The question is whether risk aversion in cryptocurrencies is isolated to stocks.
“Most of the news being published currently, for example the sell-off from Mt. Gox, is of a more bearish nature,” said Stefan von Hanisch, Head of Trading at OSL SG Pte.
Von Hanisch added that cryptocurrencies need more news on monetary policy from the Fed, stressing that “one or two interest rate cuts, along with an expansion of the Fed’s balance sheet, are two key pieces of news that cryptocurrencies are waiting for to take off.”
Investors are awaiting US jobs data later on Friday for the latest clues on the Fed's policy outlook. Recent weak economic reports have strengthened the US central bank's case for easing monetary policy in the coming months.
Bitcoin had reached an all-time high of $73,798 in March, boosted by unexpectedly strong demand for US ETFs. The flows have since subsided, sending Bitcoin lower, which exposes the rest of the digital assets to decline as well.
On the other hand, approvals for US Ethereum ETFs are still pending, as interest in the funds may fade if the cryptocurrency sell-off continues.
