Bitcoin has experienced a notable decline, dropping to $65,735 in the early Asian trading hours on Saturday. This marks a decrease of 3% in the last 24 hours and a 2.8% drop over the week. After attempting to breach the $70,000 mark earlier this week, the leading cryptocurrency has now surrendered more than half of its gains as market sentiment soured during the U.S. trading sessions on Thursday and Friday.
Altcoins have fared even worse during this downturn. Solana plunged 6.7%, while Ethereum fell by 6.2%. Other notable losses include Dogecoin, down 5.1%, and XRP, which lost 4%. These significant declines have pushed most major tokens into negative territory on a weekly basis, effectively nullifying the impressive performance of altcoins observed earlier in the week. BNB managed to sustain relatively minor losses, down just 2.5%.
The catalyst for this downturn is familiar. In Friday”s U.S. session, the S&P 500 closed down 0.4%, the Nasdaq 100 dipped 0.3%, and the Dow fell by 1.1%. The aftermath of Nvidia”s recent earnings report saw it lose 4.2%. Additionally, a higher-than-anticipated 0.5% increase in producer prices added to the market”s concerns, indicating inflationary pressures that could hinder the Federal Reserve”s plans to cut interest rates in the near future. Layoffs at Block Inc. also contributed to a growing sense of anxiety concerning the impact of artificial intelligence on employment across various sectors.
As is often the case, the cryptocurrency market reacted more dramatically than traditional equities. A minor 0.4% decline in the S&P 500 resulted in a 3% drop for Bitcoin and over a 6% decline in altcoins. The leverage that had entered the market during Wednesday”s rally was quickly unwound as prices fell.
Interestingly, despite the market”s volatility, institutional flow data indicated strong inflows this week. U.S. spot Bitcoin ETFs saw an influx of $1.1 billion in just three days, suggesting they are on track for their strongest week in months. However, these ETF inflows have not been sufficient to counteract the prevailing macroeconomic challenges. Dom Harz, co-founder of a Bitcoin finance firm, expressed in an email, “Over-analysis of short-term price movements is misguided. Bitcoin”s volatility is no surprise, particularly for early investors who have experienced previous cycles. What”s different this time is the type of capital behind the emerging asset class.”
Furthermore, data from CryptoQuant reveals that USDT stablecoin reserves on exchanges have decreased from $60 billion to $51.1 billion over the past two months. This trend raises concerns about a potential “massive sell-off” if reserves fall below $50 billion. On another note, Strategy shares are now under scrutiny as markets question the sustainability of the firm”s debt-fueled Bitcoin acquisition strategy.
On the Ethereum front, significant holders have started to offload their holdings at a loss, with the DAT company ETHZilla officially halting its ETH accumulation strategy to pivot towards tokenized real-world assets instead. Currently, Bitcoin finds itself oscillating within the $60,000-$70,000 range that it has occupied since the market crash on February 5. The recent high of $70,000 has emerged as a resistance level, leaving investors pondering whether the lower end of this range will hold as the market heads into March.
