Cryptocurrencies sank Friday, taking Bitcoin to the lowest level in more than five months as risk aversion again swept across global markets. The largest cryptocurrency dropped as much as 7.4 per cent to $38,261, while second-ranked Ether slid below $3,000. Digital tokens overall have shed some $1 trillion in value since a November peak.
“Bitcoin and the broader crypto market remain subject to the whims of macro variables,” Fundstrat Digital Asset Research strategists Sean Farrell and Will McEvoy wrote in a note.
Virtual coins have become emblematic of a retreat in speculative investments stirred by the prospect of tighter monetary policy in the US. Bitcoin has been tracking swings in technology stocks, which have been under pressure, with the Nasdaq 100 tumbling into a correction on Thursday. (Other cryptocurrencies also dropped, such as Binance Coin, Cardano and Solana.)
Investors flee from risk
Bitcoin has soared in the past several years, partially amid a narrative around institutional adoption, suitability as a portfolio hedge and as a store of value.
Its gyrations during a volatile time for global markets undercut that narrative, though the largest cryptocurrency is still up more than fourfold in the past two years.
The Fundstrat strategists suggested legacy buyers might be responsible for much of the recent decline, which has taken Bitcoin down more than 40 per cent from its November record of almost $69,000.