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Volatile bitcoin falls from record low as crypto frenzy takes pause
SINGAPORE (Reuters) – Bitcoin fell to a one-week low on Friday in volatile trade, as investors took advantage of its run to a record high and another upside surprise on U.S. inflation dampened prospects for early rate cuts and dampened demand for riskier products. assets.
Bitcoin fell more than 5% during the Asian session to a low of $66,629.96, before paring some of its losses to reach a 3.5% decline in the final session.
The choppy moves in the world’s largest cryptocurrency came a day after it priced to a high of $73,803.25, setting a new record high for a fourth straight day.
“Bitcoin has a well-established history of becoming volatile and unforgiving after hitting an all-time high,” said Matt Simpson, senior market analyst at City Index.
“And not only did it recently hit a new high, but it looks like (the Federal Reserve) won’t be as dovish as traders were hoping.”
Extensive data released Thursday showed that while U.S. retail sales rebounded less than expected in February, producer prices rose more than expected.
These publications follow data on consumer prices in the United States published earlier in the week, which showed inflationary pressures still stubborn.
Markets have responded by reducing the chances of a Fed easing cycle starting in June, with futures now pointing to about a 60% chance of a rate cut this month, down from about 74%. a week ago, according to the CME FedWatch tool.
A scenario of higher and longer interest rates, especially in the United States, is generally bad for risk-sensitive assets such as cryptocurrencies.
Nonetheless, bitcoin remains nearly 60% higher year-to-date, helped by a crypto frenzy driven by flows into U.S. exchange-traded spot crypto products and as traders remain largely focused on the prospect of a fall in global interest rates by the end of the year. .
In a show of optimism over Bitcoin’s rise, software company MicroStrategy said it plans to raise capital via a convertible bond offering to buy Bitcoin for the second time in less than 10 days.
The company announced a private offering of $600 million in convertible notes on March 5, aiming to increase its exposure to the booming digital asset.
Some experts say the news also contributed to Bitcoin’s volatility on Friday.
“Unlike traditional stock markets, the crypto market lacks regulations that limit the impact of influential individuals or entities with concentrated stakes,” said Joshua Chu, chief risk officer at Invess, a management financial engineering firm. AI-based risk management.
“This absence allows whales to make substantial trades that can trigger cascading effects and rapid price fluctuations, leading to increased volatility.”
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Elsewhere, ether, the second-largest cryptocurrency, also hit a one-week low and was last down more than 4% at $3,670.
(Reporting by Rae Wee and Ankur Banerjee; editing by Kim Coghill)