Benchmark cryptocurrency bitcoin (BTC) racked up further losses this morning, dropping 0.9% against the US dollar after a bearish Sunday session, bringing week-on-week losses to around 8.5%.
At the time of writing, the BTC/USDT pair was changing hands around US$27,330.
Bitcoin sees further losses – Source: currency.com
Bitcoin has been one of, if not the most, successful asset classes in 2023, rallying over 80% to US$31,000 in mid-April after reaching above 30k for the first time in 10 months.
As the global benchmark cryptocurrency, bitcoin aka digital gold has shown close alignment with the physical variety in 2023, due to their alignment as a relative safe-haven status amid a volatile streak in the financial markets.
But with things cooling down and a full-scale meltdown avoided, investors may be redirecting their cash to income-yielding equities and the money markets.
Gold has also been in retreat mode following a strong 2023 rally, though has remained stagnant at US$1,980 this Monday.
TickMill Group’s market analyst James Harte said: “Both gold and silver are under pressure across early European trading on Monday as focus remains on fresh Fed tightening expectations ahead of the upcoming May FOMC (Federal Open Market Committee).
As for bitcoin, Harte reasoned that a swing in Fed sentiment towards further tightening has put cryptoassets under heavy selling pressure.
“Over the duration of the SVB collapse and banking sector fallout, rate hike expectations had dwindled heavily leading to a fresh surge of demand in crypto,” said Harte. “However, in recent weeks, market pricing has shifted back in favour of a further 0.25% (rate) hike in May along with an increased likelihood of a further hike in June.”
Ethereum (ETH) also cut a bearish path this morning, dipping 1% to US$1,845 following a 0.6% decline on Sunday.
Blue-chip altcoins have universally fallen in value, with Cardano (ADA), Digecoin (DOGE), Solana (SOL), Avalanche (AVAX) posting double-digit week-on-week losses.
Asset funds see outflows
Digital asset investment products saw outflows totalling US$30m last week, according to data provided by CoinShares today.
These outflow mark an end to six solid weeks of inflows amid a strong rally in the crypto markets.
A US$17mln inflow of long-ETH products, however, partially offset long-BTC product outflows of US$53mln.
Ether inflows correlated the recent Shanghai protocol upgrade that prompted a strong rally on the second-largest cryptocurrency.
CoinShares noted: “The outflows began the prior Friday (14th April) when Bitcoin reached the very psychological level of US$30,000, suggesting the most recent sell-off was a result of profit-taking, particularly in the absence of any macroeconomic triggers.”
Global cryptocurrency market capitalisation fell 0.8% overnight to US$1.16tn, while total value locked into the decentralised finance (DeFi) space is currently around US$48.5bn, having also dipped 0.8%.
Read more on Proactive Investors AU
