News
Bitcoin Falls on Biden Drama, Risk of German Government Selloffs
(Bloomberg) — A third straight daily decline in bitcoin brought the digital asset back near levels last seen in February, amid challenges including U.S. political drama and signs that tokens seized by the German government have been moved to exchanges.
Bloomberg’s most read articles
The largest cryptocurrency fell 4.3% on Thursday before paring some of its decline to trade down 3% at $57,680 as of 10:38 a.m. in London. Smaller tokens such as Solana and meme-favorite Dogecoin also fell.
Global market investors are considering different scenarios in the event that 81-year-old President Joe Biden succumbs to calls to abandon his bid for US re-election. It is possible that a stronger Democratic candidate could emerge and make life more difficult for Republican Donald Trump, whose agenda favors the cryptocurrency industry.
“The likelihood of a stronger Democratic candidate replacing Biden, who may not be crypto-friendly, is one factor,” said Richard Galvin, co-founder of hedge fund Digital Asset Capital Management. “A more important short-term reason for Bitcoin’s weakness is the Mt. Gox surplus and government sales.”
Traders have been weighing the risk of the U.S. and German governments dumping seized bitcoins in recent days. Data from Arkham Intelligence shows that a wallet associated with the German state moved about $75 million worth of tokens to exchanges on Thursday, the latest in a series of transfers.
Meanwhile, the administrators of the bankrupt Mt. Gox exchange are gradually returning some of the bitcoins to their creditors. Speculators are unsure how much of the $8 billion will ultimately be sold.
Minors in difficulty
Operators of the power-hungry computers that power the Bitcoin blockchain are still absorbing the financial hit from April’s halving, which limited the new tokens they receive for the work they do. One response from these Bitcoin miners is to sell off some of their token stash.
“Bitcoin continues to struggle with selling pressure from miners,” wrote Noelle Acheson, author of the newsletter Crypto Is Macro Now.
Sentiment can quickly shift in the crypto space, for example if weaker U.S. economic data prompts bets on the Federal Reserve easing monetary policy. The pending approval of U.S. exchange-traded funds investing in the No. 2 token Ether could also improve sentiment.
The story continues
The interpretation of U.S. political developments could also change. Matt Hougan, chief investment officer at Bitwise Asset Management Inc., said the potential for Democratic presidential candidates to turn over “would likely translate into an improvement in the crypto landscape.” He said Washington’s attitude toward digital assets has changed for the better over the past year.
Speculators are now scrutinizing Bitcoin charts to see if closely watched technical levels are holding or breaking. The cryptocurrency just closed below an approximation of its six-month moving average price. Such violations point to further losses if history is any guide, as data compiled by Bloomberg shows.
–With assistance from Mark Cudmore and Sidhartha Shukla.
Bloomberg Businessweek’s Most Read Articles
©2024 Bloomberg LP