LONDON (Reuters) – Bitcoin, the main cryptocurrency, hit a two-month low on Friday as a wave of risk aversion sweeps across global markets.
On Thursday, bitcoin fell 7.2%, recording its biggest one-day drop since November 2022, when the FTX platform collapsed.
The asset then slipped to its lowest level in two months, at $26,172 during the opening of Asian markets on Friday, its lowest level since June 16. As of 10:00 GMT, Bitcoin had partially recovered to $26,442, down 4.35%.
Investors divested from most global markets, with major Wall Street indices closing lower on Thursday while Asian stocks headed for a third week of declines on worries about the Chinese economy and fears that the US interest rates won’t stay high longer than expected.
Ether, the world’s second-largest cryptocurrency, was flat at $1,685.20 on Friday, after also falling sharply on Thursday.
Some analysts attributed the cryptocurrency’s slump to a Wall Street Journal report that Elon Musk’s SpaceX sold off its bitcoin holdings after it depreciated in value by $373 million.
The SpaceX story was the “immediate catalyst” for bitcoin’s downfall, according to Ben Laidler, global markets strategist at eToro.
“The most important factor is that cryptoassets are not immune to worsening selling pressures seen across all asset classes,” the strategist added.
Joseph Edwards, head of research at Enigma Securities, attributes the decline in bitcoin price to low volatility and lack of enthusiasm from retail investors.
Bitcoin’s price has hovered around $30,000 in recent months after falling sharply in 2022 when several cryptocurrency companies collapsed.
Cryptocurrency markets were boosted in June by BlackRock, which filed for approval to launch a bitcoin exchange-traded fund (ETF) in the United States.
Some investors interpreted the request as an indication that the Securities and Exchange Commission, the US stock market watchdog, would approve applications for bitcoin ETFs from other asset managers, such as Greyscale, which is suing the SEC. for refusing to authorize a bitcoin fund.
“The risk is that markets will price in the outcome of the Greyscale lawsuit, as optimism on this front has supported markets for much of the summer,” added Joseph Edwards.
(Report Elizabeth Howcroft, Corentin Chapron, edited by Kate Entringer)
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