Bitcoin and the broader cryptocurrency market faced a tumultuous week, with Bitcoin (BTC) plummeting to $65,000 and altcoins experiencing significant losses ranging from 10% to 20%. The downturn was driven by a combination of economic factors and market dynamics.
Key Takeaways
- Bitcoin dropped to $65,000, its lowest in four weeks.
- Altcoins like Ether, Solana, and Cardano saw declines of 10%-20%.
- Nearly $180 million in leveraged positions were liquidated in 24 hours.
- The Federal Reserve’s monetary policy and political uncertainty in Europe contributed to the decline.
- Bitcoin ETFs saw significant outflows, adding to the market pressure.
Bitcoin’s Sharp Decline
Bitcoin tumbled more than 2% in an hour to $65,100 during the U.S. trading session, marking a 7.5% decline over the past seven days. The leading cryptocurrency struggled with increased selling from miners and profit-taking from long-time holders near the $70,000 area. Analysts had anticipated an imminent breakout for Bitcoin to new record highs, supported by a slower pace of inflation and softer economic data. However, attempts for rallies were quickly sold off, leaving BTC stuck in its sideways range.
Altcoins Suffer Steeper Losses
Smaller cryptocurrencies saw even steeper declines, with the broad-market benchmark CoinDesk 20 Index shedding almost 12% week-over-week. Ether (ETH) dropped to $3,400, losing over 10% during this period. Native tokens of rival layer-1 networks such as Solana (SOL), Avalanche (AVAX), Cardano (ADA), and Near (NEAR) experienced 15%-20% declines. The swift tumble liquidated nearly $180 million of leveraged derivatives trading positions across all crypto assets over the past 24 hours, most of them longs betting on higher prices.
Economic and Political Factors
The Federal Reserve’s recent projection of only one rate cut for this year, less than the central bank’s previous forecast, dashed investor hopes for looser monetary policy coming this summer. Political uncertainty in Europe, with a snap election being called in France, also pushed the U.S. dollar index (DXY) higher against other major currencies to its strongest level in more than a month, putting additional pressure on Bitcoin.
Bitcoin ETFs and Market Sentiment
Crypto markets faced another setback with Bitcoin ETFs continuing to record new outflows. With the exception of BlackRock’s new Bitcoin ETF, there were $226 million worth of withdrawals from Bitcoin ETFs on Thursday, representing the third consecutive day of outflows. Nearly half of the outflows stemmed from Fidelity’s Wise Origin Bitcoin Fund, which lost $106 million in Bitcoin, along with the Grayscale Bitcoin Trust, which lost $62 million. Amid these ongoing outflows, experts warn that the worst is not over, with some traders expecting Bitcoin to potentially plunge to $60,000 based on recent selling behavior among miners and other factors.
Future Outlook
Despite the bearish outlook in the short term, some analysts remain optimistic about Bitcoin’s long-term prospects. Analysts at AllianceBernstein, a global asset management firm, suggested that Bitcoin could climb to $200,000 next year. However, in the immediate future, Bitcoin continues to test the strength of the 50-day moving average, and persistent testing of the lows sets the bears up for quick success with their next target at $60,000.
