Bitcoin sinks 11% after worst week since FTX collapse
SINGAPORE – Cryptocurrencies reeled from a bout of risk aversion in global markets on Aug 5, at one point sending Bitcoin down more than 12 per cent and saddling second-ranked Ether with the steepest fall since 2021.
Bitcoin was trading down 11.7 per cent at US$53,660 around 1.35pm on Aug 5, according to CoinDesk. The digital asset lost 13.1 per cent last week, the most since the period of FTX’s bankruptcy.
Ether shed over a fifth of its value before paring some of the slide to change hands at US$2,347. Most major tokens were deeply in the red.
About US$700 million ($983 million) of bullish crypto positions using derivatives were liquidated in the past 24 hours, Coinglass data show, a sign of leveraged bets coming unstuck.
Khushboo Khullar, a venture partner at Lightning Ventures, which invests in Bitcoin-linked companies, said the broad stock slump had caused some “panic,” spurring investors to rush for liquidity to settle margin calls. She argued the crypto retreat is a “fine buying opportunity.”
The declines come as a global stock sell-off intensifies, reflecting concerns about the economic outlook and questions over whether heavy investment into artificial intelligence will live up to the hype surrounding the technology. Geopolitical tension is rising in the Middle East, adding to investor skittishness.
Bitcoin exchange-traded funds in the US suffered their largest outflows in about three months on Aug 2. One question is whether the products will attract dip buyers when they resume trading, or succumb to deeper exits.
Carry trade
Digital assets are a victim in part of the unwinding yen carry trade, as speculators adjust to higher interest rates in Japan, according to Hayden Hughes, head of crypto investments at family office Evergreen Growth.
“Those investors are also fighting a drastic increase in hedging costs based on the volatility in the US dollar-Japanese yen trading pair,” Mr Hughes said.
Bitcoin has been buffeted by a range of factors since hitting a record of US$73,798 in March, including shifting political fortunes in the US as pro-crypto Republican Donald Trump and the Democratic opponent, Vice-President Kamala Harris – who has yet to detail a digital-asset policy stance – lock horns in the presidential race.
Also hanging over the market are possible sales of Bitcoin seized by governments and the risk of a supply overhang from tokens returned to creditors through bankruptcy proceedings.
Fed outlook
Bond traders have amplified bets on US interest-rate cuts beginning in September to support economic expansion.
The prospect of less restrictive monetary policy is actually “a good thing for crypto,” argued Sean Farrell, head of digital-asset strategy at Fundstrat Global Advisors.
About US$700 million ($982.7 million) of bullish crypto positions using derivatives were liquidated in the past 24 hours, Coinglass data show, a sign of leveraged bets coming unstuck.
Khushboo Khullar, a venture partner at Lightning Ventures, which invests in Bitcoin-linked companies, said the broad stock slump had caused some “panic,” spurring investors to rush for liquidity to settle margin calls. She argued the crypto retreat is a “fine buying opportunity.”
Bitcoin’s year-to-date advance has moderated to approximately 24 per cent, compared with an 19 per cent climb in gold and a 9 per cent jump in a gauge of global stocks. BLOOMBERG
