The decline comes after the Nasdaq suffered its worst day since October as traders exited tech stocks after they led gains in 2023. Stocks fell Wednesday, but bond yields rose.
“TradFi assets stumbled at the gate in 2024, which may have contributed to increased risk aversion,” said Zach Pandle, director of research at Grayscale Investments. “Following a positioning washout, Bitcoin is expected to remain near current levels as the market awaits a Spot Bitcoin ETF decision.”
Richmond Fed President Thomas Barkin on Wednesday said he expected a soft landing, but warned that raising interest rates was still “on the table.” Investors are hoping for a rate cut in 2024 after Fed officials opted to keep rates on hold at their most recent meeting in December, signaling three cuts this year.
As a result, Bitcoin could turn into a macro transaction, Pandol said.
“We see stocks, bonds and gold weakening and the dollar strengthening,” he said. “If this message is repeated in today's Fed minutes, it could create further headwinds for our markets in the near term.”
Elsewhere, investors cited concerns that the Securities and Exchange Commission would not approve an exchange-traded fund this year, as many Bitcoin bulls had predicted.
Noel Acheson, an economist and author of the newsletter “Crypto is Macro Now,” said the uncertainty “caused anxiety among short-term traders, especially as leverage was rising rapidly, leading them to exit long positions.” I did,” he said.
January wasn't a particularly strong month for Bitcoin. According to CoinGlass, out of the past 11 years, May has ended in the green.
Before the new year's rally, Bitcoin was coming off a three-week price run, but still managed to end December up 12%. In 2023, he ended with a 157% increase.
—CNBC's Jeff Cox contributed reporting
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