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BLOOMBERG
Bitcoin traded near $42,000 after a turbulent stretch that lopped almost 8% from the largest digital asset and stirred predictions of more volatility heading into year-end.
The token posted the drop from Saturday through Monday, the worst three-day performance since mid-August, according to data compiled by Bloomberg. The retreat from almost $45,000 dragged down wider crypto markets too.
Some observers blamed edgy speculators paring positions ahead of a Federal Reserve monetary policy meeting that may test aggressive wagers on interest-rate cuts in 2024. But most struggled to find a definite trigger, describing the pullback as an expected consolidation given Bitcoin’s 152% year-to-date jump.
The token revived this year from a 2022 rout as investors grew increasingly confident that regulators will soon allow the first US spot Bitcoin exchange-traded funds. That may herald greater demand for the virtual currency.
“Crypto finally saw some profit-taking after a dizzying surge over the past few weeks,” said Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets.
“We expect to see further idiosyncratic volatility in the crypto asset class in the run-up to the ETF decision deadline in early January, which could be exacerbated by poor liquidity during the holiday period.” The crypto industry is awaiting the outcome of applications from BlackRock Inc and others to start US spot Bitcoin ETFs.
Bloomberg Intelligence expects a batch of funds to win Securities & Exchange Commission approval by next month. Another prop for sentiment is the so-called Bitcoin halving due in 2024, which will cut in half the amount of tokens that Bitcoin miners receive as reward for their work.