Bitcoin (BTC) fell back below $27,000, reversing its advance from the previous day as investors continued to assess the ongoing debt ceiling talks in Washington, D.C. and the latest regulatory moves.
The largest cryptocurrency by market cap recently traded around $26,700, down 2.1% over the past 24 hours, according to CoinDesk data. BTC challenged $27,500 on Thursday morning, but a quick decline in the early afternoon sent the price down to around $26,400.
“Bitcoin is hovering near recent lows as investors await regulatory clarity and whether Wall Street thinks any use case arguments will be made anytime soon,” Edward Moya, chief market analyst at Oanda, wrote in a note Thursday. “This frustrating trading range has turned many investors off, and if crypto fundamentals don’t improve anytime soon, the downward pressure could resume,” he continued.
More than $20 million worth of BTC futures contracts were liquidated in the past four hours, 87% of which were long positions, or higher price bets, according to Coinglass data.
Ether (ETH), the second-largest cryptocurrency by market cap, followed a similar trend, dropping 1.6% to trade at around $1,795 Thursday afternoon. The CoinDesk Market Index (CMI), which measures the performance of the overall crypto market, fell 2.2% on Thursday.
Stock markets closed higher Thursday afternoon, with a late rally pushing the Nasdaq up 1.5%, the S&P 500 up 0.95%, and the Dow Jones Industrial Average up 0.35%.
Alex Tapscott, Managing Director of the Digital Assets Group at Ninepoint Partners, told CoinDesk in an interview that BTC has performed more recently as a “technology stock” than as a “pure store of value.”
“In the past year, almost all assets have weakened against the US dollar,” Tapscott said. “We were in the midst of a real liquidity crisis where rates were going up so high that people were deleveraging. The most liquid and safest assets that many people considered were US Treasuries and the US dollar.”
“The Nasdaq and other technology-focused investments have played a bit of a catch-up” this year, he added. At the same time, we see bitcoin consolidating [near] Between $27,000 and $30,000.
Noel Acheson, market analyst and former head of research at Genesis Trading and CoinDesk (both subsidiaries of the Digital Currency Group), noted in her newsletter Thursday that if the debt ceiling ends up being raised, there could be a “sharp pull” of cash as it issues The treasury has a ton of debt in order to replenish its treasury.
Issuing debt to additional treasuries means that “money will move from cash and risky assets to US government bonds, especially as yields on these instruments rise to offset the increase in supply,” Acheson writes, adding that this could be unfavorable. As for bitcoin and gold as they both tend to fall in price when the returns go up.
While the market is bogged down during these debt ceiling talks, Ninepoint Partners’ Tapscott suggested that investors will soon turn their attention towards BTC’s 2024 halving cycle which “usually precedes a bull market in the cryptocurrency.”
Messari Research Analyst Sami Kassab told CoinDesk in an email that when examining price charts from the last three halvings — 2012, 2016, and 2020 — “it becomes clear that Bitcoin has consistently entered a bull market in the 12-18 months prior to each halving event. “
BTC’s current price action appears to be in line with these previous cycles, Kassab said, indicating that “the pattern is still holding.” But he stated that past performance is no guarantee of future results.
The halving is likely not fully priced in, said Charlie Morris, chief investment officer at ByteTree Asset Management. He told CoinDesk that “miner selling pressure literally halved next April which is buoyant. Furthermore, a four-year cycle typically sees bitcoin finish the cycle above the average price for that cycle.”
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