Bitcoin’s Decline Illustrates Shifting Investor Sentiment
SINGAPORE/LONDON, Nov 18 – Bitcoin has dropped below $90,000 for the first time in half a year, highlighting a diminishing appetite for risk among investors in the financial markets.
This volatile cryptocurrency has reversed all its gains from this year, now sitting around 30% lower than its October high of more than $126,000. Recently, it was trading down 1.1% at $92,891, having dipped as low as $89,286.75.
According to market tracker CoinGecko, the broader cryptocurrency market has seen about $1.2 trillion evaporate in the last six weeks.
Market observers suggest that uncertainty surrounding future U.S. interest rate cuts, along with general risk aversion, is contributing to this decline. The market had been volatile after previously surging for quite some time.
“Confidence can be lost at an alarming rate.”
Joshua Chew of the Hong Kong Web3 Association expressed concern that companies and financial institutions exiting their positions after a sharp rise are magnifying the downturn, potentially increasing the risk of broader market contagion.
“Confidence can erode rapidly as support diminishes and macro uncertainties grow,” he noted.
Speculators who had invested in cryptocurrencies, hoping for favorable regulatory news from the U.S., are starting to withdraw. Outflows from ETFs and similar products have continued in recent weeks, according to Joseph Edwards from Enigma Securities.
“The current selling pressure isn’t unusual, but it stems from weaker buying, and many retail investors were affected by last month’s sudden crash,” he remarked, referencing the October event that resulted in $19 billion in liquidated leveraged positions.
Companies heavily invested in cryptocurrency, like Strategy, Riot Platforms, and Mara Holdings, are feeling the impact as the market slumps.
This year saw an increase in public crypto asset companies, with various businesses from different sectors jumping into the cryptocurrency scene, even announcing intentions to acquire Bitcoin and keep it on their balance sheets.
However, Standard Chartered Bank warns that if Bitcoin drops below the $90,000 mark, about half of these companies’ Bitcoin holdings could be “underwater,” meaning their purchase price would exceed the current market value.
The bank pointed out that public companies hold around 4% of Bitcoin in circulation and 3.1% of Ether.
Meanwhile, Strategy, Inc., the largest Bitcoin holder, has expanded its Bitcoin stash, acquiring 8,178 tokens recently. The company now holds approximately 649,870 Bitcoin at about $74,433 per token, as stated by founder Michael Saylor.
Ether is also struggling, having lost nearly 40% of its value since tallying a peak of over $4,955 in August.
“The sentiment surrounding the crypto market remains quite low since the market de-leveraging in October,” commented Matthew Dibb, chief investment officer at Astronaut Capital.
