(Bloomberg) — Bitcoin’s third straight daily decline brought the digital asset close to levels last seen in February amid challenges including the U.S. political drama and the possibility of creditors selling off the bankrupt Mt. Gox exchange.
Most read from Bloomberg
The largest cryptocurrency fell as much as 2.7% on Thursday before paring some of its decline and trading down 1% at $58,880 as of 1:30 p.m. in Singapore time. Smaller tokens such as Solana and meme-crowd favorite Dogecoin also fell.
Investors across global markets are playing out scenarios in the event that 81-year-old President Joe Biden succumbs to calls to scrap his re-election bid in the US. One possibility is that a stronger Democratic candidate emerges to make life harder for Republican Donald Trump, whose agenda favors the crypto industry.
Meanwhile, Mt. Gox administrators are gradually returning more than 137,000 bitcoin to creditors. Traders are uncertain how much of the $8 billion haul will ultimately be sold, and are separately weighing the risk of the U.S. and German governments selling seized bitcoin.
“The likelihood of a stronger Democratic candidate replacing Biden who may not be pro-crypto is a factor,” said Richard Galvin, co-founder of hedge fund Digital Asset Capital Management. “A larger near-term reason for Bitcoin’s weakness is the Mt. Gox overhang and government selling.”
Fighting miners
The operators of the power-hungry computers that power the Bitcoin blockchain continue to absorb the financial blow from April’s so-called halving, which capped the new tokens they receive for the work they do. One response from these Bitcoin miners has been to sell off some of their inventory of tokens.
“Bitcoin continues to struggle with selling pressure from miners,” wrote Noelle Acheson, author of the newsletter Crypto Is Macro Now.
Sentiment could quickly shift in crypto, for example, if weaker U.S. economic data prompts bets on looser monetary policy from the Federal Reserve. Pending approvals for U.S. exchange-traded funds investing in No. 2 token Ether could also improve sentiment.
The interpretation of U.S. political developments could also change. Matt Hougan, chief investment officer of Bitwise Asset Management Inc., argued that the potential turnover at the top of the Democratic ticket “will more likely than not translate into an improved spot for crypto.” He said Washington’s stance on digital assets has generally improved over the past year.
Speculators are now scouring Bitcoin charts to see if closely watched technical levels will hold or decline. The cryptocurrency closed just below a near six-month average price. Such breakouts portend more losses if history is any guide, data compiled by Bloomberg shows.
–With assistance from Mark Cudmore and Sidhartha Shukla.
Most read from Bloomberg Businessweek
©2024 Bloomberg LP
