2 - 4 minute read
As global markets experienced a dip in the past week, cryptocurrency emulated those losses, with the price of bitcoin (BTC) dropping 3.4% over the past 24 hours to $28,200. The digital asset has dropped from its recent high of $31,000 less than a week ago, causing a decline in stocks related to cryptocurrency. Stocks in the crypto sector faced losses, with miners such as Marathon Digital (MARA) and Hut 8 Mining (HUT) falling by 10% and 9%, respectively. Riot Platforms (RIOT) saw its shares down by around 10%, while MicroStrategy (MSTR) and crypto exchange Coinbase (COIN) fell more than 6%.
Despite there being no specific news on Thursday to account for the more than 3% dip in Bitcoin’s price, the U.K. consumer price report, which unexpectedly showed inflation remaining at above 10% in March, may have played a role. Some analysts suggest that such news may affect Western central banks’ decision to hold back or reverse series of hikes on rates.
Mixed U.S. Economic Data
Poor U.S. economic data released on Thursday may have also influenced the current situation. Initial jobless claims rose higher than expectations at 5,000 to 245,000, the Philadelphia Fed Manufacturing Index for April fell to -31.30 versus expectations for -19.2, and existing home sales for March fell 2.4% versus forecasts for a rise of 5%. All these factors combined to influence the price of Bitcoin and related stock prices.
The continuous drop in the price of Bitcoin, as well as the sharp decline of related stocks, causes concern among traders. While traders hope that the upcoming Federal Open Market Committee meeting will result in a rate hike or reversal, the increasing prospects of these changes are already priced in at nearly 100%. This may lead traders to cautious trading practices that won’t cause more losses.
The Bottom Line
The recent decline in the price of Bitcoin and related stocks has put traders on edge. While the exact drivers of these changes are unclear, the coinciding signs of inconsistent economic data in the US and firm inflation in the UK could play a role. There is hope among traders for positive decisions to come from the upcoming Federal Open Market Committee meeting. However, the increasing prospect of these changes has traders cautious moving forward, and it is essential for them to minimize losses while seeking any potential gains.
