Market Volatility Hits Bitcoin, Prices Plummet
The world’s first digital asset, Bitcoin, has experienced a dramatic downturn, falling to its lowest level this year. This sudden drop comes after a promising start to the year, which saw Bitcoin briefly surpass the $100,000 mark.
A Sharp Decline
On Thursday, Bitcoin’s value plummeted by as much as 2.8%, reaching a low of $91,785. This significant decline marks a 15% drop from its all-time record of $108,315, set in mid-December. The cryptocurrency’s struggle to maintain momentum has left investors reeling.
Investors Pull Back
The withdrawal of a net $583 million from US Bitcoin exchange-traded funds on Wednesday has contributed to the downturn. This marks the second-highest outflow from the group since their debut a year ago. The initial success of these ETFs, coupled with President-elect Donald Trump’s vocal support for the digital-assets industry, had previously propelled Bitcoin to new heights.
Economic Data Weighs on Expectations
The release of US economic data on Tuesday has tempered expectations for imminent Federal Reserve rate cuts, putting pressure on risky assets like Bitcoin. This has led to a decrease in investor confidence, causing the cryptocurrency’s value to drop.
Market Uncertainty
According to Nick Forster, founder of crypto trading platform Derive.xyz, traders are currently seeking downside protection in the form of put options, anticipating heightened volatility. The market is bracing for potential corrections, which may be driven by concerns about the Federal Reserve’s hawkish guidance.
A Breakout on the Horizon?
Peter Chung, head of research at Presto Research, believes that Bitcoin prices will continue to fluctuate between $91,000 and $102,000 until the market completes its re-calibration process and uncertainty clears. A breakout may occur after President-elect Trump’s inauguration and during his first 100 days in office, when signals of change are likely to emerge.
Trading Halt Adds to Uncertainty
The halt in US stock market trading on Thursday, due to the funeral of former President Jimmy Carter, has reduced activity and liquidity. This lack of trading is expected to further contribute to market volatility.
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