Bitcoin Hits 2-Month Low Amidst Global Market Uncertainty
The world's leading cryptocurrency, Bitcoin, plummeted to a fresh two-month low on Friday, shattering the confines of its recent narrow trading range. This abrupt slide follows a series of events that have ignited concerns about the stability of financial markets and intensified worries about the global economy.
On Thursday, Bitcoin faced its steepest one-day decline since November 2022, tumbling by 7.2 per cent, sending shockwaves through the cryptocurrency community. This significant drop was exacerbated by a report from The Wall Street Journal, indicating that SpaceX, spearheaded by influential figure Elon Musk, had liquidated its Bitcoin holdings after devaluing them by a staggering USD 373 million. Musk's impact on the crypto sphere has been palpable, with past market movements often triggered by his tweets and decisions.
During Asian trading hours on Friday, Bitcoin further stumbled to a low of USD 26,172. However, there was a slight recovery, with Bitcoin clawing back to USD 26,441 by 0835 GMT, though still down 0.8 per cent for the day. This downward spiral was emblematic of a broader trend, as global markets reeled from a wave of selling. Wall Street's primary indexes endured declines on Thursday, while Asian shares found themselves embroiled in a third consecutive week of losses. Apprehensions concerning China's economic trajectory and mounting fears of prolonged elevated US interest rates, given the robust state of the American economy, contributed to the prevailing risk-off sentiment.
Ether, the second-largest cryptocurrency, mirrored Bitcoin's descent, dropping precipitously on Thursday but stabilising at USD 1,685.20. The synchronised movement of these two major digital assets underscored the interconnectedness of the cryptocurrency landscape.
Analysts attributed the cryptocurrency's recent struggles to multiple factors. While the SpaceX report acted as an immediate trigger for the sell-off, experts emphasised that the broader context was a deepening risk-off atmosphere permeating all asset classes.
In June, the cryptocurrency market had found renewed vigour following BlackRock's application to establish a spot Bitcoin exchange-traded fund (ETF) in the United States. This move was widely interpreted as an optimistic signal for the approval of similar ETF applications, including those from Grayscale, by the US Securities and Exchange Commission (SEC).
