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Bitcoin (BTC) plummeted below the $27,000 mark, undoing its previous day's progress, as investors deliberated the ongoing debt ceiling negotiations in Washington, D.C. and the recent regulatory developments.
Based on CoinCryptoUs data, the dominant cryptocurrency in terms of market capitalization recently hovered around $26,700, registering a 2.1% decrease within the last 24 hours. Although BTC briefly flirted with the $27,500 threshold on Thursday morning, an abrupt downturn in the early afternoon pushed the price down to nearly $26,400.
“Bitcoin is hovering near its recent lows as investors await regulatory clarity and whether Wall Street believes any use-case arguments will be made anytime soon,” Edward Moya, senior market analyst for foreign exchange market maker Oanda, wrote in a Thursday note. “This frustrating trading range has turned off many investors and if the crypto fundamentals don’t improve anytime soon, downward pressure could resume,” he continued.
Coinglass data reveals that within the last four hours, an astounding sum of over $20 million in BTC futures has been liquidated, primarily consisting of long positions constituting 87% of the total. Long positions indicate bullish speculation on higher prices.
Ether (ETH), the cryptocurrency with the second-highest market capitalization, experienced a comparable pattern as it declined by 1.6% and was trading at approximately $1,795 on Thursday afternoon. Meanwhile, the CoinDesk Market Index (CMI), a measure of the overall performance of the cryptocurrency market, witnessed a 2.2% decrease on Thursday.
Equity markets concluded the afternoon on a positive note, as a late surge propelled the Nasdaq up by 1.5%, the S&P 500 by 0.95%, and the Dow Jones Industrial Average by 0.35%.
In an interview with CoinDesk, Alex Tapscott, the managing director of the digital asset group at Ninepoint Partners, commented that Bitcoin (BTC) has exhibited characteristics resembling "a technology stock" rather than being solely perceived as "a pure store of value" in recent times.
“Last year, almost all assets weakened against the US dollar,” Tapscott said. “We were in the midst of a real liquidity crunch where rates were going up so much that people were deleveraging. The most liquid and most safe assets a lot of people considered were U.S. Treasuries and U.S. dollars."
“The Nasdaq and other tech-focused investments have played a little bit of catch-up” this year, he added. “At the same time, we're seeing bitcoin consolidating around [near] between $27,000 to $30,000 level.”
Although some analysts suggested that the discussion over the debt ceiling might elevate the value of "safe-haven" assets like gold and bitcoin, Tapscott expressed his skepticism regarding the possibility of Bitcoin's price increasing in the event of a government default.
Noelle Acheson, a market analyst and former head of research at Genesis Trading and CoinDesk (both subsidiaries of Digital Currency Group), pointed out in her newsletter on Thursday that if the debt ceiling ended up being raised, there could be “a sharp withdrawal of monetary liquidity as the Treasury issues a ton of debt in order to replenish its treasury.”
The issuance of debt to top-up coffers means that “money will move out of cash and risk assets into US government bonds, especially as yields on these instruments rise to offset the increase in supply,” Acheson wrote, adding that this could be unfavorable for bitcoin and gold as both tend to fall in price when yields are rising.
Bitcoin’s 2024 halving cycle
As the market remains uncertain amidst the ongoing debt ceiling discussions, Tapscott from Ninepoint Partners proposed that investors will soon shift their focus towards BTC's 2024 halving cycle, which historically "typically precedes a bull market in crypto."
According to an email from Sami Kassab, a Messari Research Analyst, shared with CoinDesk, a clear pattern emerges when analyzing the price charts of the last three bitcoin halvings in 2012, 2016, and 2020. Kassab pointed out that "it becomes apparent that bitcoin has consistently entered a bull market within 12-18 months prior to each halving event."
Kassab noted that the recent price movements of BTC seem to align with these previous cycles, indicating that "the pattern is still holding." Nevertheless, he cautioned that past performance does not guarantee future outcomes.
According to Charlie Morris, the chief investment officer at ByteTree Asset Management, the full impact of the halving is likely not reflected in the current price. He explained to CoinDesk that "miner selling pressure literally halves next April which is buoyant. Moreover, the 4-year cycle normally sees bitcoin end the cycle above the average price for that cycle."
Source Coindesk
