Bitcoin extended its decline for a third consecutive day, nearing levels not seen since February, as it contends with multiple challenges including US political uncertainty and potential sell-offs linked to the Mt. Gox exchange bankruptcy.
The largest cryptocurrency initially dropped by as much as 2.7% on Thursday, before recovering slightly to trade 1% lower at $58,880 by 1:30 p.m. in Singapore. Smaller tokens like Solana and Dogecoin, popular among meme-crowds, also registered declines.
Global investors are closely monitoring developments amid speculation about potential changes in US leadership. Concerns are mounting about the impact on cryptocurrency policies if President Joe Biden, 81, bows to pressure to withdraw his reelection bid, potentially opening the door for a more crypto-skeptical Democratic candidate against Republican Donald Trump, known for his favorable stance on the industry.
Meanwhile, administrators of Mt. Gox are gradually returning over 137,000 Bitcoin to creditors, raising uncertainties about the eventual impact of these funds entering the market. Additionally, traders are wary of potential Bitcoin disposals by US and German authorities from seized assets.
Richard Galvin, co-founder of Digital Asset Capital Management, highlighted these uncertainties, noting, “The overhang from Mt. Gox and potential government selling are significant short-term factors contributing to Bitcoin weakness.”
Bitcoin miners are also grappling with financial pressures stemming from the recent halving event, which reduced their earnings from creating new tokens. This financial strain has led some miners to sell off portions of their Bitcoin holdings, adding further downward pressure.
Noelle Acheson, author of the Crypto Is Macro Now newsletter, pointed out, “Bitcoin continues to battle with selling pressure from miners.”
Market sentiment remains volatile, with potential catalysts such as US economic data releases or approvals for exchange-traded funds focused on Ethereum (Ether) potentially shifting investor sentiment. Despite current challenges, some experts believe that ongoing developments in US regulatory attitudes towards digital assets could provide support in the longer term.
Matt Hougan, Chief Investment Officer at Bitwise Asset Management Inc., commented, “Changes in the US political landscape may settle in a more favorable place for crypto,” noting improved sentiment towards digital assets over the past year.
As Bitcoin navigates these uncertainties, market observers are closely monitoring technical indicators, including its recent breach below a six-month moving average, which historically has signaled further potential losses.
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