By Jack Denton
Bitcoin and other cryptocurrencies fell Thursday, weakening further since a selloff that rocked digital assets and stocks alike a week ago. Traders are bracing for more declines, though a key catalyst looms that could propel prices higher.
The price of Bitcoin has fallen 4% over the past 24 hours to $61,100 and recently was as low as $60,800 -- sitting far below its 50-day moving average above $67,000, which flashes a signal of technical market weakness. The largest digital asset hovered near $70,000 as recently as last Friday -- not far from its record high -- before geopolitical tensions around Iran's drone attack on Israel and renewed worries around inflation sent Bitcoin spiraling lower alongside the S&P 500.
"Bitcoin has run into a brick wall with the halving upon us as ETF demand cools off while geopolitical risks and uncertainty about inflation and monetary policy move to the fore," said Antoni Trenchev, co-founder of crypto lender Nexo. "These factors could keep a lid on Bitcoin in the interim before the halving cycle properly plays out. A move into the low $50,000s isn't out of the question."
Bitcoin has run into similar headwinds as the stock market as geopolitical tensions and strong U.S. economic data raised the prospect of persistent inflationary pressures that could keep the Federal Reserve from cutting interest rates as soon as once thought. Demand also has cooled off slightly for spot Bitcoin exchange-traded funds (ETFs), which were approved in the U.S. in January and had ushered in a fresh wave of investor interest in cryptos.
Nevertheless, crypto traders are bullish on Bitcoin's outlook because of the so-called halving, which is set to take place on Friday or Saturday. The halving is a change to Bitcoin's programmatic monetary policy that will cut issuance of new tokens in half, restricting supply and boosting prices as long as demand holds steady or increases.
"The fourth Bitcoin halving slashes miner rewards in half only three months after U.S. ETFs unleashed a wave of newbie buying. It's this supply-demand dynamic that'll lead to a $100,000 Bitcoin in 2024," said Trenchev.
Trenchev isn't the only one calling for Bitcoin at $100,000 as a result of the halving -- even if that run higher doesn't happen immediately.
"During previous cycles ... people would lose interest until the issuance reductions really kicked in and triggered the associated rallies several months after the fact," said Phillip Shoemaker, executive director at decentralized verification group Identity.com. "Until then, I think we see more of the same -- that is, more chop and more volatility. But by the end of the year, I expect Bitcoin will have reached about $100,000 or so."
Beyond Bitcoin, Ether -- the second-largest crypto by market value -- fell 4% to below the key $3,000 level. Smaller tokens also were weaker, with Solana sliding 7% and Ripple retreating 4%. Memecoins fell, with Dogecoin dropping 8% and Shiba Inu shedding 3%.
Write to Jack Denton at jack.denton@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 18, 2024 04:05 ET (08:05 GMT)
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