Bitcoin’s recent surge toward the $70,000 mark was short-lived, lasting only about 48 hours before retreating to $65,735 during early trading in Asia on Saturday. This represents a decline of 3% within a single day and a 2.8% drop over the week. The rally that brought Bitcoin close to the coveted $70,000 threshold appears to have erased more than half its gains, coinciding with a deterioration in broader risk sentiment experienced during Thursday and Friday’s trading in U.S. markets.
Altcoins faced even steeper losses in this downturn. Notably, Solana fell by 6.7%, Ethereum decreased by 6.2%, Dogecoin was down 5.1%, and XRP lost 4%. These declines have reversed the altcoin outperformance that had been a focal point of optimism earlier in the week. BNB, on the other hand, showed relative resilience, declining by only 2.5%.
The decline in cryptocurrencies can be traced back to Friday’s trading session on the U.S. markets, where the S&P 500 closed down 0.4%, the Nasdaq 100 fell by 0.3%, and the Dow Jones dropped by 1.1%. Nvidia, already in the spotlight following its earnings report, lost an additional 4.2%. A surprising increase of 0.5% in producer prices further indicated inflationary pressures, suggesting that the Federal Reserve may not cut interest rates anytime soon. Compounding this unease was news of significant layoffs at Block Inc., raising concerns that artificial intelligence is beginning to displace jobs instead of solely generating them.
As often the case, the cryptocurrency market reacted more dramatically than traditional equities. For instance, a modest 0.4% decrease in the S&P translated into a 3% drop for Bitcoin and over a 6% fall for many altcoins. The leverage that had re-entered the crypto market during Wednesday’s rally was quickly wiped out as prices fell.
Interestingly, despite these losses, institutional investment appeared robust this week. U.S. spot Bitcoin exchange-traded funds (ETFs) added $1.1 billion within just three days, setting a pace for the best week in months. However, this influx of funds failed to counterbalance the prevailing macroeconomic pressures. “Over-analysis of short-term price movements is misguided,” said Dom Harz, co-founder of the Bitcoin finance firm BOB. He noted that Bitcoin’s volatility is well-known to long-term investors who have weathered previous cycles. “What’s different this time is the type of capital backing this emerging asset class.”
Further complicating the situation, data from CryptoQuant indicated a significant decline in USDT stablecoin reserves on exchanges, falling from $60 billion to $51.1 billion over the past two months. The firm warned that if reserves dip below $50 billion, it could spark a “massive sell-off.”
In the corporate arena, Strategy has emerged as the firm with the highest short interest volume among major U.S. companies, amid growing skepticism regarding its debt-funded Bitcoin acquisition strategy. On the Ethereum front, large holders have begun to offload their assets at a loss, with the DAT company ETHZilla officially shifting its focus away from ETH accumulation to encompass tokenized real-world assets.
At this juncture, Bitcoin finds itself nestled in the $60,000-$70,000 range, a territory where it has remained since the significant crash on February 5. With its recent peak proving to be a resistance point, market observers are left pondering whether the lower end of the range can withstand further pressure as the month of March approaches.
