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Bitcoin Falls Below $40K for First Time in 2 Weeks
Bitcoin's notorious volatility has upended what had been shaping up as a strong month for returns.
By Brian Evans
Updated May 11, 2023, 6:08 p.m. Published Feb 18, 2022, 3:03 p.m.
Bitcoin fell below $40,000 for the first time in two weeks, putting a damper on recent hopes among some digital-asset traders that the cryptocurrency might be poised to rally.
The price had already tumbled 7.3% on Thursday, the steepest losses in four weeks as the Dow Jones Industrial Average had its worst day of 2022. A modest decline this morning pushed bitcoin down to as low as $39,700. The price quickly rebounded to $40,700 but has since fallen below the $40,000 mark again.
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Analysts cited the continuing conflict over Ukraine as weighing on sentiment, while traders in traditional markets are reckoning with the likelihood of aggressive Federal Reserve actions this year to tighten monetary conditions and tamp down inflation.
"Bitcoin has clearly lost its function as a defensive asset lately, showing almost no correlation with gold, which was in high demand on Wednesday and Thursday," Alex Kuptsikevich, senior financial analyst at FxPro, said in an email to CoinDesk Thursday.
In traditional markets, the S&P 500, the Nasdaq was down 1.3% and the Dow fell about 0.5% after starting the day flat.
UPDATE (Feb. 18 16:18 UTC): Updated with latest price action.
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Coinbase Sees Crypto Recovery Ahead as Liquidity Improves and Fed Rate Cut Odds Climb
The crypto exchange also took note of a so-called AI bubble that continues to go strong and a weaker U.S. dollar.
What to know:
- Coinbase Institutional is seeing a potential December recovery in crypto, citing improving liquidity and a shift in macroeconomic conditions that could favor risk assets like bitcoin.
- The firm's optimism is driven by rising odds of Federal Reserve rate cuts, with markets pricing in a 93% chance easing next week, and improving liquidity conditions.
- Several recent institutional developments, including Vanguard's crypto ETF policy reversal and Bank of America's greenlighting of crypto allocations, have contributed to bitcoin's rebound from recent lows.
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