Bitcoin fell below $63,000 on Friday, marking its lowest point in about two weeks. The downturn comes as momentum for a US cryptocurrency regulatory bill slows, and disappointing earnings from Coinbase (COIN.US) and Strategy (MSTR.US) further dampen market risk appetite, prompting investors to pull back from high-risk assets like cryptocurrencies.
At the time of writing, Bitcoin had dropped as much as 3.6% to $62,405, its weakest level in roughly two weeks, bringing its year-to-date decline to around 30%. Other smaller, less liquid cryptocurrencies also slid broadly. Joshua Lim, Co-Head of Global Markets at FalconX, noted that the crypto market has struggled to sustain upward momentum recently, with funds using each rally to reduce positions as expectations for the "Clear Act" continue to fade. Additionally, Bitcoin's options implied volatility remains near historic lows, with a large volume of covered call strategies keeping price swings in check and maintaining a range-bound trading pattern.
Market participants point out that this decline coincides with a setback for one of the most anticipated policy catalysts for the crypto industry—the stalled progress of the Clear Act. The bill failed to advance to the Senate floor before the US Congress's summer recess, sharply cooling market expectations for a swift implementation of a US crypto regulatory framework and weakening bullish sentiment.
Meanwhile, earnings from crypto-related public companies have further dented confidence. Coinbase, the largest US cryptocurrency exchange, reported quarterly results showing continued weakness in retail trading demand. Strategy, the world's largest publicly traded holder of Bitcoin, recorded a massive $8.22 billion impairment loss on its Bitcoin holdings due to the price decline, resulting in a significant quarterly loss.
Analysts suggest that Bitcoin's current pullback is also occurring against a broader backdrop of risk asset pressure. Recently, volatility in Wall Street's popular AI-themed stocks has increased, overall risk appetite in US equities has declined, and short-term capital chasing high-risk assets is becoming more cautious. Shiliang Tang, Managing Partner at Monarq Asset Management, remarked that with Coinbase earnings missing expectations, the Clear Act losing steam before the August congressional recess, and long-term US Treasury yields rising after the Federal Reserve's policy meeting, the market has shifted into a "risk-off" mode. Investors are generally reducing their risk exposure heading into the weekend.
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