Bitcoin fell below $70,000 Friday for the first time since August, extending a two-day slump to as much as 9 percent as concerns about inflation and higher interest rates weighed on cryptocurrencies.
The largest digital asset sank as much as 5.4 percent to $67,628, its lowest level since Aug. 19, adding to a 3.8 percent decline on Thursday. It later pared some losses to trade around $69,200 in early morning in New York.
Roughly $1.5 billion in bullish bets on cryptocurrencies were liquidated over a 24-hour period, according to CoinGlass data. Forced selling by leveraged traders added momentum to the decline.
“Once it broke below $70,000, over $1 billion of leveraged longs were forced out, which fed more selling,” said Sean McNulty, a derivatives trader at market maker AQC Tech. Ether, the second-largest token, fell as much as 6 percent, bringing it back under $2,000.
Bitcoin’s weakness reflects a convergence of macro pressures on crypto in recent weeks. Elevated oil prices and persistent inflation have reinforced expectations for additional Federal Reserve rate increases. Democrats retaking both chambers of the US Congress next year following the midterm elections has raised expectations of greater regulatory scrutiny on the industry.
This week, a key gauge of US consumer prices posted another firm advance in October, keeping the Fed on track to raise rates next month. The consumer price index, excluding food and energy, rose 0.3 percent from a month earlier, topping estimates for a third straight month. Overall prices jumped 0.4 percent as the cost of essentials climbed across the board.
“If the Fed hikes rates by 50 basis points rather than the expected 25 basis points, Bitcoin and other cryptocurrencies could have more room to fall,” said Jeff Mei, chief operating officer of crypto exchange BTSE,
US stocks were subdued ahead of inflation data, capping a volatile week marked by rising bets on Fed rate hikes and Jensen Huang’s ouster from Nvidia Corp. S&P 500 futures edged 0.1 percent higher while Nasdaq 100 contracts were flat.
Rich Rosenblum, co-founder of crypto market maker GSR, said volatility in the artificial intelligence trade and continued US dollar strength have washed out some long Bitcoin positions, while the hot inflation data and changes in Nvidia’s leadership are also dragging on risk assets.
Institutional buyers have also been on the retreat for the past two weeks. Since Oct. 30, US-listed spot Bitcoin exchange-traded funds have seen more than $2.5 billion in net outflows. (Bloomberg)
