Bitcoin (BTC), the world’s leading cryptocurrency, experienced a sharp drop in price during Friday’s Asian trading session. The price plunged to as low as $67,000, representing a 7% decline from its previous level of $70,000. However, it managed to partially recover and is currently hovering around $68,500.
This price movement coincides with a broader market correction. The CoinDesk 20 index, which tracks the performance of the largest and most liquid digital assets, also dipped by 6%. Additionally, other asset classes like gold and the Nasdaq stock index have witnessed downward pressure this week.
Analysts offer various explanations for the Bitcoin pullback. Some view it as a natural consolidation period following a strong uptrend. They point to recent robust US inflation data (CPI) that has tempered expectations of a Federal Reserve rate cut. This, coupled with a decline in gold prices, suggests a broader market shift.
Another factor could be the upcoming Bitcoin mining reward halving scheduled for next month. Adrian Wang, CEO of Metalpha, suggests the market might be adjusting to potential uncertainties surrounding this event. The historical trading volume of Blackrock’s Bitcoin ETF has also instilled some unease, with concerns that a rapid price surge could be followed by a sudden crash.
However, not everyone is pessimistic. Singapore-based QCP Capital believes these dips are temporary, especially with consistent demand for daily BTC spot ETFs. They anticipate some weekend volatility leading up to the release of the Federal Open Market Committee (FOMC) minutes next week. Interestingly, their trading desk reports strong interest in year-end Bitcoin call options with strike prices between $100,000 and $150,000.
Meanwhile, prediction markets on Polymarket show a diminished, but still present, chance of Bitcoin exceeding $70,000 by the US Eastern Time close on Friday. This figure sits at 38%, significantly lower than the 90% recorded earlier this week
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