News
Bitcoin faces worst month since FTX crash as ETF demand cools
(Bloomberg) — Bitcoin recorded its worst month since the collapse of Sam Bankman-Fried’s FTX empire as euphoria around U.S. exchange-traded funds for the largest digital asset subsides.
Most read on Bloomberg
The original cryptocurrency fell nearly 16% in April, just a hair below the decline seen in November 2022. The US ETF-induced madness took Bitcoin to an all-time high of nearly 74,000 $ in March, but as demand for risky investments continues to fade Hoping for an interest rate cut from the Federal Reserve, flows into the products have declined significantly.
A nearly 5% swoon in Bitcoin to around $60,000 on Tuesday weighed on the rest of the crypto universe, with larger losses recorded by smaller rivals such as Ether and Solana against memecoins. Shares of so-called crypto companies closed lower.
As of April 29, the month saw a net outflow of $182 million from the 11 U.S. cash ETFs. Funds saw a net inflow of $4.6 billion in March. The U.S. Securities and Exchange Commission approved the funds in January.
“ETFs have created a new avenue for engagement that has been extremely popular, much more popular than any expectations,” Seth Ginns, Coinfund managing partner and head of liquid investments, said in an interview with Bloomberg on Tuesday. Television. This “led Bitcoin to rise very quickly, much more than expected.”
The highly anticipated Bitcoin halving, a quadrennial event that reduces the supply of new coins to the market and has historically acted as a price tailwind, has had minimal impact since it occurred on the 19th. april. Although the halving did not affect the number of transactions that can be processed per block, it did halve the amount of new Bitcoin that miners receive.
Shares of crypto mining companies have fallen more than the price of Bitcoin. Marathon Digital Holdings Inc. fell 11%, Riot Platforms Inc. fell 8.8%, Cleanspark Inc. fell 9.6% and Cipher Mining Inc. fell 7.9%.
Additionally, MicroStrategy Inc. fell 18%. The software company, which purchased Bitcoin as part of its business strategy, posted a first-quarter loss of $53 million on Monday. The company wrote down the value of its Bitcoin holdings, even though the cryptocurrency surged during the period.
The story continues
Market watchers were looking to Asia in search of a new tailwind and had all eyes on Bitcoin and Ether spot ETF listings in Hong Kong, but Tuesday’s debut failed to inspire confidence in investors. The six new ETFs saw a combined trading volume of $11 million in the first session, according to data compiled by Bloomberg. This is a far cry from the total volume of $4.6 billion that the 10 US spot-Bitcoin products recorded in their debut.
“The market built up irrational expectations before the launch of Hong Kong ETFs,” said Vetle Lunde, an analyst at K33 Research.
Ether, the second largest token, fell by 18% in April, experiencing its largest monthly decline since June 2022.
The SEC requested information from various companies in March as part of its review of Ether. Last week, crypto software company Consensys filed a lawsuit challenging the SEC’s authority to regulate the Ethereum and Ether blockchain, marking the latest legal battle between the crypto industry and the agency.
Other smaller, more volatile tokens such as Dogecoin and Polkadot fell even further on Tuesday. These so-called altcoins tend to outperform Bitcoin during rallies and fall further during downturns.
—With help from Sonali Basak.
Most read from Bloomberg Businessweek
©2024 Bloomberg LP