Key Points
- Bitcoin fell to a seven-month low of $81,668, and ether hit a four-month low. The crypto sell-off is part of a broader market shift away from risky assets.
- The decline is fueled by concerns about high-tech valuations and fading hopes for a U.S. interest rate cut.
- About $1.2 trillion has been erased from the total crypto market value in the last six weeks.
- Stocks of crypto-related companies, such as Coinbase and Strategy, have also been hit hard.
Bitcoin and ether tumbled to their lowest levels in months on Friday, caught up in a broader sell-off of risky assets. The drop comes as investors grow worried about high-tech valuations and as hopes for near-term U.S. interest rate cuts begin to fade.
Bitcoin, the world’s largest cryptocurrency, fell 5.5% to a seven-month low of $81,668. Ether, the second-largest, slid more than 6% to $2,661.37, its lowest in four months. Both tokens are down about 12% for the week.
Cryptocurrencies are often seen as a measure of how much risk investors are willing to take. Their recent slide highlights just how nervous the market has become, with high-flying artificial intelligence stocks also falling and volatility on the rise. About $1.2 trillion has been wiped from the total market value of all cryptocurrencies in the last six weeks.
“If it’s telling a story about risk sentiment as a whole, then things could start to get really, really ugly, and that’s the concern now,” said Tony Sycamore, a market analyst at IG.
This decline follows a fantastic run for bitcoin earlier this year, which saw it hit a record high above $120,000 in October, thanks to more favorable regulations for crypto assets globally. However, analysts say the market is still shaken by a record single-day crash last month that wiped out over $19 billion in positions.
Bitcoin has now lost all of its gains for the year and is down 12%, while Ether has lost nearly 19%.
The sell-off has also hit the stock prices of companies that hold large amounts of crypto on their balance sheets. Shares of Strategy, once a poster child for corporate bitcoin accumulation, have fallen 11% this week. The research firm CryptoQuant noted in its weekly report that “Bitcoin market conditions are the most bearish they have been since the current bull cycle started in January 2023.”
