CoinDesk Report:
Author: Suvashree Ghosh, Sidhartha Shukla, Bloomberg; Translation: Baishui
Bitcoin has fallen for the fourth consecutive trading day, part of a broader cryptocurrency sell-off that sharply contrasts with recent record highs in global stock markets.
BTC hit its lowest level since February, changing hands at around $54,400. Smaller tokens like Ethereum, XRP, and Cardano have suffered even greater losses, exceeding 10% in some cases.
Cryptocurrency speculators are currently facing a series of challenges, including declining demand for U.S. Bitcoin exchange-traded funds, signs of governments disposing of seized tokens, and the uncertain impact of U.S. political turmoil.
In addition, administrators of the collapsed Mt. Gox exchange are gradually returning a large amount of Bitcoin to creditors. Speculators are unsure how much of the $8 billion will ultimately be sold. According to Arkham Intelligence, a wallet associated with Mt. Gox transferred tokens worth $2.7 billion last Friday.
Reduced Correlation
Meanwhile,
MSCI Inc.’s global stock index hovers near historic highs, while the short-term 30-day correlation between Bitcoin and this index is significantly declining.
The question remains whether the risk aversion sentiment in the cryptocurrency sector stands alone or heralds a cautious quarter for mainstream investments after a strong first half in the stock market.
Stefan von Haenisch, Trading Director at OSL SG Pte, said, “There is currently a general lack of attention in the cryptocurrency market.” “Most of the current news circulating, such as the sale of Mt. Gox, is inherently more pessimistic.”
Von Haenisch noted that cryptocurrencies need the Fed to take a more dovish stance on monetary policy, adding, “One or two rate cuts, along with expansion of the Fed’s balance sheet, are the two key factors cryptocurrencies are truly waiting for.”
Investors await U.S. employment data due Friday evening for the latest clues on Fed policy outlook. Recent weak economic reports support reasons for the Fed to ease monetary policy in the coming months.
Bitcoin reached a historic high of $73,798 in March, fueled unexpectedly strong by initial U.S. ETF demand. Subsequent fund inflows tapered, causing Bitcoin prices to decline and casting a shadow over other parts of the digital asset market.
Approval processes for Ethereum ETFs are pending, but continued cryptocurrency sell-offs could sway interest in these products either way.
Liquidation
Coinglass data shows over $800 million in bullish cryptocurrency bets have been liquidated over the past three days, marking one of the largest such liquidations since April.
Caroline Mauron, Co-founder of Orbit Markets, a digital asset derivatives liquidity provider, said, “Weekend liquidity issues will exacerbate any volatility triggered by these liquidations, even on a small scale.” She added that the return of U.S. investors following the July 4 holiday should help bring some stability.
Operators of electricity-consuming computers supporting the Bitcoin blockchain continue to endure financial impacts from April’s so-called halving, limiting their receipt of new tokens from their work. One response among these Bitcoin miners has been to sell portions of their token inventory.
Le Shi, Trading Director at market-making and algorithmic trading firm Auros, commented:
“The $51,000 to $52,000 range is critical as many Bitcoin miners are reaching their breakeven points for profitable mining operations.”