Updated March 15th, 2024 at 11:00 IST

Bitcoin retreats from record high amid volatility as crypto frenzy pauses

During the Asian session, Bitcoin fell over 5 per cent to hit a low of $66,629.96 before recovering some losses, ultimately trading 3.5 per cent lower.

Reported by: Business Desk
Bitcoin fell over 5 per cent to hit a low of $66,629.96 | Image:Unsplash
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Bitcoin price: Bitcoin witnessed a decline to one-week low in volatile trading on Friday, as investors capitalised on profits following its recent surge to a record high. Additionally, another upside surprise in US inflation data tempered expectations of early rate cuts, thereby denting demand for riskier assets, including cryptocurrencies.

During the Asian session, Bitcoin fell over 5 per cent to hit a low of $66,629.96 before recovering some losses, ultimately trading 3.5 per cent lower.

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The erratic fluctuations in the world's largest cryptocurrency followed a day of new highs, with Bitcoin reaching a pinnacle of $73,803.25, marking a new record for the fourth consecutive day.

Matt Simpson, senior market analyst at City Index, commented on Bitcoin's tendency for volatility post-record highs, noting concerns over the Federal Reserve's perceived lack of dovishness, which may impact market sentiment.

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A recent slew of data releases in the United States revealed that while retail sales rebounded less than anticipated in February, producer prices exceeded expectations. These developments, coupled with earlier indications of persistent inflationary pressures, prompted markets to reassess the likelihood of a Fed easing cycle commencing in June.

The reduced probability of rate cuts in the near term, particularly in the US, typically unfavourably affects risk-sensitive assets like cryptocurrencies.

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Despite the retreat, Bitcoin remains nearly 60 per cent higher year-to-date, bolstered by a surge in crypto frenzy driven by investments in US spot exchange-traded crypto products. Additionally, traders continue to monitor the global interest rate landscape with expectations of rates remaining lower by year-end.

In a demonstration of confidence in Bitcoin's bullish trajectory, software firm MicroStrategy announced plans to raise capital through a convertible bond offering, aiming to purchase Bitcoin for the second time in less than 10 days. This news is believed to have contributed to Bitcoin's volatile movements on Friday.

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Joshua Chu, chief risk officer at Invess, highlighted the unique nature of the crypto market, lacking regulations that limit the influence of individuals or entities with concentrated holdings. This absence allows significant trades by whales to trigger rapid price fluctuations, contributing to heightened volatility.

Meanwhile, Ether, the second-largest cryptocurrency, mirrored Bitcoin's downturn, reaching a one-week low and declining by over 4 per cent to $3,670.

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(With Reuters inputs)
 

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Published March 15th, 2024 at 11:00 IST