Bitcoin fell below $90,000 for the first time in seven months in the latest sign that investor appetite for risk is drying up across financial markets. The cryptocurrency began to rebound as United States markets opened on Tuesday, but Monday’s steep drop in the risk-sensitive asset had already wiped out all of its gains for the year, and it is now nearly 30 per cent below its peak of $126,000 in October.
The world’s largest cryptocurrency was down 0.5 per cent at $91,338.47 during European trading hours, after slipping as low as $89,286.75. About $1.2 trillion has been wiped off the total market value of all cryptocurrencies in the past six weeks, according to market tracker CoinGecko.
Market participants said that a combination of doubts around future interest rate cuts by the US Federal Reserve and the risk-averse mood in broader markets, which have wobbled after a long rally, was dragging down crypto. Joshua Chu, co-chair of the Hong Kong Web3 Association, said: “The cascading selloff is amplified by listed companies and institutions exiting their positions after piling in during the rally, compounding contagion risks across the market. When support thins and macro uncertainty rises, confidence can erode with remarkable speed.”
Speculators who had put money into crypto in the hopes of supportive US regulation have started to pull back, causing steady outflows from exchange-traded funds (ETFs) and similar instruments in recent weeks, according to Joseph Edwards at Enigma Securities. He noted that the sell pressure is not extraordinary but is coming at a “relative weak point on the buy side” after many retail buyers were “stung during the flash crash last month.”
