Bitcoin slumps below $28,000 for the first time since late June
The largest digital asset by market value fell as much as 4.3% to $27,699
New York: Bitcoin reached an almost two-month low as risk aversion weighs on the cryptocurrency market with global government bond yields climbing to the highest in about 15 years.
“When you throw in what is happening in the bond market, it becomes easy for Bitcoin prices to soften,” Edward Moya, senior market analyst at Oanda, said in a note. “If risk aversion becomes the dominant theme on Wall Street, Bitcoin’s bearish momentum could target the $27,200 level.”
The largest digital asset by market value fell as much as 4.3 per cent to $27,699, extending losses after dropping below $28,000 for the first time since June 20. The decline was the biggest on an intraday basis since July 14.
The gradual slide in the price of Bitcoin in recent weeks has erased about half the gains registered in the wake of BlackRock’s surprise filing for an Bitcoin ETF on June 15. After surging 72 per cent in the first quarter, Bitcoin has declined about 2 per cent since the end of March. The token tumbled 64 per cent last year amid a series of industry scandals and bankruptcies.
“There aren’t enough good headlines coming out of crypto to get people excited,” said Michael Safai, partner at quantitative trading firm Dexterity Capital. “Conversely, rising interest rates and weakened risk appetite are pushing non-crypto-native traders towards safer assets.”
The rise in global yields comes as resilient economic data challenges the view that central banks rates are peaking. Higher interest rates generally lessen the appeal of alternative investments such as cryptocurrencies.
The drop in Bitcoin follows a period in which the cryptocurrency has been trading in a narrow range for months. Gauges that measure the price swings of the original cryptocurrency have been trending down, with 90-day volatility reaching its lowest since 2016 this week, according to data compiled by Bloomberg.
“There was optimism earlier in the week that a resolution to the Grayscale Bitcoin ETF would come this week but that passed with nothing coming out,” Shiliang Tang, chief investment officer at crypto investment firm LedgerPrime, said. “Furthermore traditional markets have been weak all week with SPX and tech selling off, 10-year rates reaching highs and the dollar catching a bid, and China credit and econ data weakness, all of which are negatives for risk assets.”