Bitcoin has fallen by over 3% in the past 24 hours amid a broader stock market downturn as investors are losing appetite for riskier assets.
The largest digital asset by market capitalisation (BTC-USD) dropped from over $65,500 (£50,868) to nearly $64,000 in early trading on Thursday, according to Coingecko data. The price of ethereum (ETH-USD) also lost ground, plunging 8% in the past week after net outflows from the newly launched spot ethereum exchange-traded funds (ETFs), which commenced trading on stock exchanges on Tuesday.
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The drop in major cryptocurrencies follows a general weakening of sentiment for risk assets. US equity markets took a hit on Wednesday, causing the tech-heavy Nasdaq (^IXIC) to lose 660 points, its largest fall since 2022. The so-called ‘Magnificent 7’ tech stocks saw their market capitalisation decrease by over $750bn, marking the largest single-day loss on record for this group of stocks.
The downturn in equity markets extended to Asian markets on Thursday morning, with Japan’s Nikkei (^N225) falling more than 3%, down 1,285.34 points to 37,869.51. This decline was fuelled by worries that the Bank of Japan might increase interest rates.
Sell-side pressure on bitcoin
Bitcoin is feeling sell-side pressure from two vectors: the US government’s decision to transfer bitcoin to crypto exchange Coinbase and the distribution of Mt. Gox repayments to creditors.
On Monday, an account labelled “US Government: Ryan Farace Seized Funds” transferred bitcoin valued at nearly $4m to the Coinbase cryptocurrency exchange, as reported by Arkham Intelligence. This is a small amount, considering the US government holds over 213,000 bitcoin, amounting to approximately $14.2bn.
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Additionally, creditors of the defunct cryptocurrency exchange Mt. Gox have started receiving bitcoin and bitcoin cash distributions on the Kraken and Bitstamp cryptocurrency exchanges.
According to a report this week from QCP Capital analysts, due to mounting selling pressure, “bitcoin and ether prices may remain subdued until momentum builds up leading to the US elections.”
Trump’s speech at Bitcoin 2024
Analysts have noted that former President Donald Trump’s forthcoming participation at the Nashville Bitcoin conference this weekend is one factor bolstering the bitcoin market.
“Out-of-the-money options have seen a significant price surge, suggesting expectations for more drastic market fluctuations,” analysts from QCP Capital, said. This rise in demand and prices for these options mirrors a broader sense of anticipation among market participants that Trump could give a positive endorsement of bitcoin at the upcoming conference.
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In a recent post on Truth Social, Trump cautioned against allowing China and Russia to dominate the digital asset economy. He emphasised the need for the US to mine the remaining unmined bitcoin domestically, stating: “We want all the remaining bitcoin to be made in the USA.”
In an interview with Bloomberg, Trump expanded on these remarks, warning of the repercussions for the US if it lost the race for bitcoin dominance. “If we don’t do it, China is going to pick it up,” he said. “I don’t want to be responsible for letting another country take over this sphere.”
Trump’s endorsement of bitcoin and his acknowledgement of its geopolitical importance have sparked discussions among US policymakers about classifying bitcoin as a strategic, national reserve asset.
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