Bitcoin
experienced a temporary dip below $61,000 on Thursday evening as investors grew increasingly skeptical about the cryptocurrency, previously regarded as “digital gold” and a reliable store of value.
At one point, Bitcoin was trading at $60,062.00 amid a worsening sell-off in the cryptocurrency market. By 7:37 p.m. ET, Bitcoin had lost about 15%, settling at $62,448.00.
Broader digital assets, including Bitcoin, have encountered significant declines, prompting investors to reconsider the practical applications of Bitcoin, which was once touted as a hedge against inflation and a replacement for traditional currencies and gold.
However, these expectations have yet to materialize, particularly since Bitcoin’s price peaked just above $126,000 in early October.
Earlier on Thursday, Bitcoin dropped below the crucial $70,000 mark, leading to intensified sell-offs and bringing its value closer to pre-election figures. This week alone, Bitcoin has fallen nearly 30%.
Bitcoin, 1 day
“This ongoing decline indicates that traditional investors are losing faith, leading to a growing sense of negativity surrounding cryptocurrencies,” noted Deutsche Bank analyst Marion Laboure in a recent client update.
The increasing reticence among investors stems from unfulfilled expectations surrounding Bitcoin. The cryptocurrency has been moving in tandem with riskier assets like stocks, especially during the recent geopolitical tensions in regions such as Venezuela, the Middle East, and Europe. Additionally, its use as a payment method remains limited.
Bitcoin Underperforms Gold
Over the last year, Bitcoin’s value has plummeted about 40%, while gold futures have surged by 61% during the same timeframe.
Other cryptocurrencies are also facing steep declines. Ether has dropped 33% in the last week, while Solana hit a low of $88.42 on Thursday, marking a two-year bottom. This cryptocurrency is down by nearly 40% this week.
Traders have highlighted $70,000 as a crucial threshold for Bitcoin. A fall below this level could signal the onset of further declines.
James Butterfill, Coinshares’ head of research, stated that $70,000 is becoming a vital psychological milestone. He emphasized, “If we cannot maintain this level, a shift toward the $60,000 to $65,000 range becomes highly probable.”
The price of Bitcoin over the last year.
The recent Bitcoin fluctuations align with a declining trend in U.S. tech stocks. The State Street Technology Select Sector SPDR ETF (XLK) fell by 1.8% on Thursday, marking three consecutive days of losses.
Simultaneously, precious metals are experiencing volatility, with silver experiencing another drop and gold facing pressure.
Forced liquidations—where traders’ positions are automatically sold upon hitting specific prices—are continuing to impact markets. This week, over $2 billion in both long and short cryptocurrency positions have been liquidated, according to Coinglass data.
Bitcoin has been on a steady decline for over three months, now sitting more than 50% below its peak from October. Other cryptocurrencies like Ether and XRP have seen even sharper declines.
“The anticipated continued bullish trend has not yet materialized. Bitcoin no longer trades on speculation; rather, it reflects pure liquidity and shifting capital flows,” stated Maja Vujinovic, CEO of digital assets at FG Nexus, during an interview on CNBC’s “Worldwide Exchange.”
Decrease in Institutional Demand
Historically, many in the cryptocurrency market have credited large institutional investors for bolstering Bitcoin’s price, but now these same entities are starting to offload their assets.
According to CryptoQuant, “Institutional demand has shifted significantly.”
Exchange-traded funds (ETFs) in the U.S., which acquired 46,000 Bitcoins a year ago, are now net sellers this year, as stated by CryptoQuant.
The report highlights other troubling indicators: “For the first time since March 2022, Bitcoin has fallen below its 365-day moving average and has declined by 23% in the 83 days since this breakdown—worse than the bear market phase of early 2022,” the analysts from CryptoQuant elaborated.
A moving average helps track an asset’s price over a designated period, smoothing out short-term fluctuations to identify overall trends.
The latest downturn in Bitcoin indicates “a potential decline toward the $70K–$60K range,” as suggested by CryptoQuant.