A worsening macroeconomic climate and the collapse of industry giants such as FTX and Terra have weighed on bitcoin’s price this year.
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Bitcoin’s price slumped to around $57,000 apiece Thursday, hitting a two-month low after the U.S. Federal Reserve released minutes from its June meeting indicating the central bank isn’t yet ready to cut interest rates.
At around 2:30 p.m. London time, the digital currency fell around 5% in 24 hours to $56,837, falling below the $57,000 mark for the first time since May 1, according to data from crypto ranking site CoinGecko. Since then, bitcoin has pared losses somewhat and was trading at $57,932.57, down 3.4% as of 5:05 p.m. London time.
Rival token ether, the world’s second-largest cryptocurrency, was down 5% at $3,120.
It comes after the Federal Reserve on Wednesday released minutes from its June meeting which showed officials are reluctant to lower interest rates until additional data shows inflation moving sustainably toward the central bank’s 2% target.
Higher interest rates are typically less favorable for bitcoin and other cryptocurrencies as it dampens investor risk appetite.
Bitcoin stormed to an all-time high of above $73,700 in March this year after the Securities and Exchange Commission approved the first U.S. spot bitcoin exchange-traded fund, or ETF.
ETFs allow investors to buy a product that tracks the price of bitcoin without owning the underlying cryptocurrency. Crypto proponents say this has helped legitimize the asset class and make it easier for larger institutional investors to get involved.
Since then, however, bitcoin has been trading within a range between roughly $59,000 and $72,000.
Recently, the world’s largest cryptocurrency has been pressured by news of collapsed bitcoin exchange Mt. Gox readying the distribution of around $9 billion worth of coins to users, which is expected to lead to some significant selling action.
However, analysts at crypto data and research firm CCData said in a research report Tuesday that bitcoin hasn’t yet reached the top of its current appreciation cycle and is likely to hit a fresh all-time high.
According to the report, historical market “cycles” have shown that bitcoin’s so-called “halving” event — which cuts the supply of new bitcoins to the market — has always preceded a period of price expansion that can last between 12 to 18 months “before producing a cycle top.”
The last bitcoin halving took place on April 19 this year, so those historical timeframes have yet to pass.
“Moreover, we have observed a decline in trading activity on centralised exchanges for nearly two months following the halving event in previous cycles, which seems to have mirrored this cycle. This suggests that the current cycle could expand further into 2025,” CCData said.
Meanwhile, bitcoin bull Tom Lee told CNBC’s “Squawk Box” Monday that he still sees bitcoin hitting $150,000 despite the “overhang” from Mt. Gox’s upcoming disbursement of tokens to creditors.
“If I was invested in crypto, knowing that one of the biggest overhangs is going to disappear in July, I’d think it’s a reason to actually expect a pretty sharp rebound in the second half,” Lee, Fundstrat Global Advisors’ co-founder and head of research, said in the TV interview.