Bitcoin is hanging around $61,000 as of Tuesday after suffering through a tough week, with some analysts suggesting that additional declines may be on the horizon as investors shift their focus to eye-catching IPOs in the artificial intelligence sector.
Last week, the cryptocurrency dipped below $60,000 for the first time since October 2024 and has plummeted more than 50% from its peak of over $126,000 reached last year.
This past week was the worst for Bitcoin since the fallout from the FTX crash back in 2022, which was fueled by the scandal involving Sam Bankman-Fried, shaking confidence in the digital currency and erasing around $200 billion from the cryptocurrency market almost overnight.
On Tuesday, Bitcoin dropped by 2% to $61,789.36.
“The downward trend has been evident in recent months, and we’re not seeing signs that it will change anytime soon,” Nansen analyst Jake Kenneth told a local publication. “Bear markets often take a long time to recover.”
Amid rising inflation and persistent fears of interest rate hikes, many investors seem to be pulling out of Bitcoin exchange-traded funds (ETFs).
That day, the technology-heavy Nasdaq fell by 1.7%, driven down by semiconductor stocks, as the market braces for a wave of significant IPOs in the tech arena.
Nancy Tengler, CEO of Laffer Tengler Investments, mentioned traders were offloading assets to raise capital ahead of a massive IPO led by SpaceX later in the week.
Elon Musk’s SpaceX is expected to go public this Friday, and its valuation could soar to $1.75 trillion.
Furthermore, Claude, another major player valued at around $1 trillion, is also set to launch its own IPO soon, while OpenAI, the creator of ChatGPT, announced on Monday that it has filed for an IPO as well.
William Stern, founder and CEO of Cardiff, noted that institutional investors are shifting cash away from crypto ETFs and investing directly in tech stocks where returns seem quicker. “We anticipate more declines until the current excitement in technology cools off and the market stabilizes,” he stated.
A surprising Bitcoin sale by Strategy Inc. has also triggered some panic among investors. The leading corporate holder of Bitcoin disclosed that it sold 32 Bitcoins for roughly $2.5 million, breaking a long-standing commitment from founder Michael Saylor to “never sell.”
On Monday, the firm, formerly known as MicroStrategy, further announced the acquisition of 1,550 Bitcoins for around $101 million in an effort to ease market concerns, though investor confidence remains shaky.
Compounding the unease, Bitcoin has dipped below its 200-week moving average, a key metric often used to assess volatility, raising alarms last week. Paul Howard, a senior director at crypto trading firm Wincent, commented, “This drop below the 200-week moving average suggests we may be entering a bearish phase, and any rebound isn’t likely to last.”
Analysts at cryptocurrency exchange Bitfinex have echoed similar concerns, indicating signs of a bear market. They explained, “Unlike last month’s active push to buy, recent movements show traders using this pullback to exit the market.”
