fell to its lowest level in more than six weeks as worries about the global economic outlook and money leaving US exchange-traded funds (ETFs) put pressure on the cryptocurrency market.
Bitcoin dropped as much as 3.3% to $72,643 in Singapore Thursday, its weakest since April 13. Second-largest token Ether fell more than 4% to $1,965, its lowest in almost two months.
Investor sentiment is being hit by concerns that the ongoing US-Iran conflict could push up inflation and force interest rates higher. At the same time, US spot s have seen about $1.5 billion in net outflows so far in May, adding to the selling pressure.
Moreover, “The broader sentiment also remains weak due to the lack of progress on key U.S. crypto legislation, including the Digital Asset PARITY Act and the CLARITY Act, keeping investors cautious,” Akshat Siddhant, Lead quant analyst, Mudrex.
Bitcoin weakness “macro-driven, not crypto-specific”: Experts
Bitcoin’s weakness “looks mostly macro-driven, not crypto-specific,” Sean McNulty, Asia-Pacific derivatives trading lead at FalconX, told Bloomberg.
Higher US yields and a firmer dollar have tightened financial conditions, while ETF withdrawals and reports of a large block sale of the iShares Bitcoin Trust — the largest Bitcoin ETF — also dented sentiment, he said.
Traders turn cautious amid macro jitters
Bitcoin is currently trading around $72,800, with analysts saying it needs to hold the $70,000 level to avoid further downside.
“A sustained move above $75,000 could help stabilise the price in the short term,” says Siddhant
IG Markets analyst Tony Sycamore said crypto traders are becoming more cautious as they wait for clearer developments in the Middle East.
“Furthermore, with equity markets starting to look a little tired, Bitcoin is feeling the pinch as leveraged long positions get trimmed on the break of key support levels in the mid $70,000’s,” Sycamore told Bloomberg
. Overall, near-term risks remain tilted to the downside.