What appeared to be prime time for cryptocurrencies on the back of falling inflation data turned into a bad week with Bitcoin (BTC) plunging to its weakest price in four weeks on Friday.
During the US trading session, BTC fell more than 2% in an hour to $65,100, from around $67,000. The leading cryptocurrency has fallen 7.5% over the past seven days.
Smaller cryptocurrencies saw even steeper declines, with the benchmark CoinDesk 20 index losing nearly 12% on a weekly basis. Ether (ETH) fell to $3,400, losing more than 10% during this period, while native tokens from rival layer-1 networks Solana (SOL), Avalanche (AVAX), Cardano (ADA) and Near (NEAR) recorded an increase of 15%-20%. decreases, CoinGecko data shows.
The rapid collapse has liquidated nearly $180 million in leveraged derivatives trading positions across crypto assets in the past 24 hours, most of which want to bet on higher prices, CoinGlass data shows. This week’s shake-up saw a total of more than $870 million liquidated, removing excess leverage from the markets.
Analysts and many market participants just a few days ago were predicting an imminent bitcoin breakout to new record highs, supported by a slower pace of inflation and weaker economic data, but rally attempts were quickly sold off, leaving BTC stuck in his lateral range. To know more: Here’s why Bitcoin isn’t keeping up with the Nasdaq
The Federal Reserve on Wednesday forecast just one rate cut this year, smaller than the central bank’s previous forecast, dashing investors’ hopes of looser monetary policy coming this summer. Political uncertainty in Europe with early elections called in France also pushed the US dollar index (DXY) higher against other major currencies to its strongest level in more than a month, putting pressure on bitcoin.
Bitcoin has also struggled amid increased selling by miners and profit-taking by longtime holders near the $70,000 area, 10X Research noted, weighing on the broader cryptocurrency market.
