The world of cryptocurrency witnessed a significant downturn as bitcoin, the leading digital currency, plunged to a fresh two-month low on Friday, signaling a departure from its recent narrow range. The decline was driven by a prevailing cautious sentiment across global markets.
In a notable one-day descent on Thursday, bitcoin recorded a sharp 7.2% drop, marking its most substantial decline since November 2022, when the prominent exchange FTX faced a collapse. Subsequently, during the Asian trading hours on Friday, bitcoin slipped further to touch a low of $26,172, which was the lowest since June 16. As of 0835 GMT, the cryptocurrency had partially rebounded to $26,441, indicating a 0.8% decrease for the day.
The broader global financial landscape has been hit by a wave of selling, with major indices on Wall Street closing lower on Thursday. Simultaneously, Asian shares were on track for a third consecutive week of losses. Concerns regarding China’s economic stability and apprehensions about the likelihood of sustained higher U.S. interest rates in the face of a resilient economy have contributed to this sentiment shift.
The second-largest cryptocurrency, ether, maintained stability at $1,685.20, following a substantial drop on Thursday that mirrored bitcoin’s decline.
Several market observers linked the crypto market’s downturn to reports that Elon Musk’s SpaceX had sold its bitcoin holdings, having previously written down the value by $373 million. Elon Musk’s influence on the crypto space is notable, with previous instances of bitcoin price fluctuations being triggered by his tweets. The report on SpaceX’s bitcoin sale was identified as the “immediate catalyst” for the drop in bitcoin’s value.
Analysts further emphasized that while the SpaceX report played a role, the broader reason for the crypto market’s decline lies in the fact that digital assets are not immune to the overall risk-off sentiment seen across various asset classes. Ben Laidler, a global markets strategist at eToro, highlighted this aspect and mentioned the growing selling pressure across assets.
Joseph Edwards, Enigma Securities’ head of research, noted the impact of low volatility and subdued enthusiasm from retail investors in the movement of bitcoin’s price.