Bitcoin, the leading cryptocurrency, experienced a fresh two-month low as it broke out of its recent narrow trading range amid a surge in risk-averse sentiment that swept across global markets on Friday.
On Thursday, Bitcoin recorded a significant 7.2% drop, marking its most substantial single-day decline since November 2022 when the top exchange FTX faced a collapse. Subsequently, it slipped to a two-month low of $26,172 during Asian trading hours on Friday, marking its lowest point since June 16. However, by 0835 GMT, it had partially rebounded to $26,441, down 0.8% for the day.
Global markets have been rattled by a widespread sell-off, with Wall Street’s main indices closing lower on Thursday and Asian shares on track for a third consecutive week of losses. Concerns about China’s economy and fears that U.S. interest rates would remain elevated due to a resilient economy have fueled this risk-off sentiment.
Ether, the second-largest cryptocurrency, remained stable at $1,685.20, despite also experiencing a sharp drop on Thursday.
Some analysts attributed the crypto downturn to a Wall Street Journal report indicating that Elon Musk’s SpaceX had sold its bitcoin holdings after writing down their value by $373 million. Musk’s influence among crypto enthusiasts has previously led to Bitcoin price fluctuations in response to his tweets.
Ben Laidler, global markets strategist at eToro, identified the SpaceX report as the “immediate catalyst” for Bitcoin’s sell-off. He further emphasized that the broader driver behind the crypto slump was the fact that crypto assets were not immune to the growing risk-off selling pressure observed across all asset classes.
Bitcoin had been hovering around the $30,000 mark in recent months, gradually recovering this year after a sharp decline in 2022 when several crypto firms collapsed, resulting in substantial losses for investors.