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Bitcoin posts biggest drop in two months as liquidations resume
(Bloomberg) — Losses are piling up in the cryptocurrency market after the second-worst weekly decline of 2024, a reflection of cooling demand for Bitcoin exchange-traded funds and uncertainty over monetary policy.
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Bitcoin fell 8.1% to $58,528 on Monday, its biggest intraday decline since April 13. The leading token by market value has been hit by two weeks of outflows from exchange-traded products that hold the cryptocurrency. More than $210 million worth of bullish bets on the cryptocurrency were liquidated in the past 12 hours, according to data compiled by tracker Coinglass.
A gauge of the 100 largest digital assets fell about 5% in the seven days through Sunday, the steepest drop since April, according to data compiled by Bloomberg.
Adding to fears of increased selling pressure, the trustee for the rehabilitation of Mt. Gox, the Japanese cryptocurrency exchange that was hacked more than a decade ago, announced that it would begin redemptions of Bitcoin and Bitcoin Cash at July.
“Given the Mt Gox announcement, it appears that there are market participants shorting,” Stefan von Haenisch, head of trading at OSL SG Pte. “Cryptocurrency markets are struggling to catch a bid at the moment.”
The cracks in the cryptocurrency sector arise amid doubts over the Federal Reserve’s ability to quickly cut interest rates from a two-decade high. For some analysts, the retreat in digital assets is a warning sign for broader risk appetite.
The current cryptocurrency market dynamic is “characterized by low volatility, weak volumes, and orders that go out of balance when prices begin to move to the edges of their range,” David Lawant, head of research at FalconX, wrote in a note.
The declines in some markets are particularly noticeable: the streak of weekly declines for Ether and Solana is the longest since last year and 2022, respectively.
This is just as fund companies prepare to launch the first US ETFs that invest directly in Ether, the second largest cryptocurrency. Solana, meanwhile, has recently been a favorite among a variety of digital asset hedge funds.
Bitcoin hit a record high of $73,798 in March, but has lagged behind traditional investments such as stocks, bonds and gold this quarter. According to Tony Sycamore, market analyst at IG Australia Pty, the 200-day moving average at around $57,500 is now in focus as a possible support zone for the price.
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“It seems like a bearish mood is setting in,” said Caroline Mauron, co-founder of digital asset derivatives liquidity provider Orbit Markets. “The market is finding it difficult to digest large sell orders.”
Bitcoin investment products saw outflows of around $600 million for the second straight week, the most in a two-week period since the United States approved exchange-traded funds as holders of the largest cryptocurrency in January.
Overall, digital asset products saw outflows of $584 million in the week ending June 21, data from CoinShares International Ltd. shows. Bitcoin products accounted for the majority, with outflows of $630 million occurring are added to another $600 million the previous week.
–With assistance from Suvashree Ghosh and Benjamin Taubman.
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