Breaking News: Bitcoin Plummets as Asia Wakes Up to Trading Day
Bitcoin Declines to $67K as Fed Triggered Convexity Adjustment?
Bitcoin took a fall to $67,000 during Friday’s Asian trading hours, tracking losses in both gold and the Nasdaq index. According to one analyst, this drop was likely triggered by fading expectations for a Fed rate cut.
Despite the initial drop, the broader uptrend for bitcoin remains intact as long as there is continued demand for spot BTC ETFs, according to QCP Capital. However, the recent surge in bitcoin prices has been too rapid for the market to keep up with, leading to a correction.
This correction has also been seen in other assets such as gold and the tech-heavy Nasdaq index, which have also come under pressure this week. As a result, some analysts believe that this pullback is a typical breather for a bull market after a sharp uptrend.
Greta Yuan, Head of Research at VDX, suggests that the recent strong CPI data has cooled expectations for a Fed rate cut, leading to a drop in gold prices and subsequent pressure on other assets like bitcoin. Adrian Wang, Founder and CEO of Metalpha, also believes that the market is adjusting to uncertainties ahead of next month’s mining reward halving.
Some concerns have also been raised about the potential impact of Blackrock’s Bitcoin ETF, which has seen high trading volumes and could lead to a sudden price surge and subsequent flash crash. According to QCP Capital, dips like these are likely to be short-lived as long as the daily demand for BTC spot ETFs remains strong.
However, QCP Capital also notes that some volatility can be expected over the weekend as the market prepares for the release of Federal Open Market Committee minutes next week. Their trading desk has seen strong demand for year-end BTC calls between $100,000 and $150,000.
In the prediction market, there is currently a 38% chance that BTC will close above $70,000 by noon Friday in U.S. Eastern Time, down from a high of 90% earlier this week, according to Polymarket.
