The largest digital asset fell toward $62,000 in weekend trading, reaching its weakest level since July, extending a decline that has gathered pace in recent weeks. Unlike the abrupt crashes that have punctuated previous crypto downturns, much of the preceding decline unfolded during relatively subdued trading before liquidations accelerated in recent days.
The steady erosion is adding to a sense of exhaustion across a market confronting a growing list of obstacles, from the record hack at Binance and renewed political uncertainty following Democratic gains in the US midterm elections to rising Treasury yields and a stronger dollar. Meanwhile, the artificial-intelligence boom and Anthropic’s upcoming IPO are competing for money and attention once directed toward digital assets.“The near-term direction will largely depend on whether institutional demand stabilizes and macro conditions provide room for risk appetite to recover,” said Ayesha Kiani, chief operating officer at Monarq Asset Management. “Until then, rallies are likely to remain fragile and volatility elevated.”
Bloomberg
US spot Bitcoin exchange-traded funds, which helped draw Wall Street investors into the market, have become another source of selling pressure. From Oct. 30 — the day after the Binance hack — through Nov. 13, the ETFs saw almost $3 billion in net outflows.
Economic conditions offer little relief. The yield on 10-year US Treasuries has climbed above 5% as persistent inflation fueled expectations of tighter Federal Reserve policy. Higher yields raise the opportunity cost of holding assets that generate no income, while the stronger dollar has added pressure to Bitcoin and gold.
Crypto-specific developments have compounded the weakness.
The Binance hack has revived questions about the security of trading platforms at a time when the industry is struggling to rebuild investor confidence. The competition for speculative capital is also intensifying. Anthropic’s planned initial public offering has attracted heavy demand ahead of its expected listing, raising the possibility that investors are freeing up money from other holdings, including cryptocurrencies, to participate. The extent of any direct shift out of digital assets remains unclear.
“Theories around the market weakness tend to focus on the large outflows of stablecoin balances, nearly $20 billion over the last month, the upcoming IPO of Anthropic and its impact on liquidity,” said Joshua Lim, co-head of markets at FalconX.
Bitcoin’s retreat is particularly frustrating for investors who had expected mainstream adoption to provide a more durable foundation for prices. Major financial institutions have expanded their involvement in digital assets, and ETFs have made Bitcoin available to a much broader pool of investors. Those advances have not insulated the market from its latest downturn.
Many smaller digital tokens have surrendered years of gains, challenging the returns available to investors who held through successive industry booms and busts.
For traders looking for a potential floor, August offers one reference point.
After risk appetite improved following the US Treasury’s announcement of an increase in long-bond buybacks, Bitcoin rallied from below $65,000 to above $87,000 by late September. The latest decline has erased most of those gains and raised the prospect of a further slide under the roughly $58,000 level that has marked this year’s low.
“We’re in a risk-off environment across all financial markets. Interest rates keep rising with the war still pressuring inflation,” said Ryan Watkins, co-founder of crypto investment fund Syncracy Capital.
