TOPLINE
Bitcoin slumped to its lowest price in weeks Tuesday, as the world’s largest cryptocurrency’s all-time high achieved last week looks to be fleeting.
KEY FACTS
Bitcoin fell 7% to below $63,000 by 2 p.m. Greenwich Mean Time (10 a.m. EDT), the time zone typically used for cryptocurrencies as the digital assets are traded constantly.
Tuesday was bitcoin’s lowest price since March 5.
Bitcoin is now down about 15% from its all-time high of nearly $73,800 set last Thursday.
Other cryptocurrencies have similarly slumped, and prices of the next three largest digital assets – ether, Solana and Binance coin – are down more than 7% apiece over the last 24 hours.
WHAT’S BEHIND BITCOIN’S PRICE DROP?
There’s no singular catalyst for the recent bitcoin selloff, but several factors are likely at play. Bitcoin’s price is historically much more volatile than stock prices, which combined with traders’ tendency to take profits following a massive runup in asset prices can cause notable downward swings. There’s also significantly elevated trading activity for bitcoin as spot bitcoin exchange-traded funds (ETFs) flooded institutional money into crypto, with daily dollar-value bitcoin volumes registering their 10 largest values over the last three weeks alone, according to Yahoo Finance data. Finally, there’s been a noticeable uptick in liquidations for bitcoin futures contracts, according to Coinglass, which can send bitcoin prices lower as exchanges force users to close their leveraged bitcoin positions.
BIG NUMBER
$320 billion. That’s about how much the combined market capitalization of the global crypto market is down over the last week, according to CoinGecko. Bitcoin’s $180 billion slide accounts for much of the decline.
KEY BACKGROUND
Bitcoin’s returns remain eye popping, as its roughly 40% gain over the last six months and 130% year-to-date far outpace those of leading stock indexes. The rally, which erased the steep decline suffered by bitcoin in 2022 as the crypto industry turned sideways amid higher borrowing costs and revelations of high-profile bad actors like FTX’s Sam Bankman-Fried, came as equity prices rose and investors grew excited about the prospects of the ETFs, which went live in January, attracting billions of dollars of fresh capital.