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On
Thursday, bitcoin fell 7.2% in its biggest one-day drop since
November 2022 when top exchange FTX collapsed.
It then slipped to a two-month low of $26,172 during Asian
trading hours on Friday, its lowest since June 16. By 0835 GMT,
it had partly recovered to $26,441, down 0.8% on the day.
Global markets have been hit by a wave of selling, with Wall
Street's main indexes closing lower on Thursday and Asian shares
heading for a third week of losses over concerns about China's
economy and fears that U.S. interest rates would stay higher for
longer given a resilient economy.
Ether, the second biggest cryptocurrency, was steady at
$1,685.20, having also dropped sharply on Thursday.
Some analysts attributed crypto's drop to a Wall Street Journal
report that Elon Musk's SpaceX sold its bitcoin holdings after
writing the value down by $373 million. Musk is influential
among crypto enthusiasts, and bitcoin prices have previously
moved in response to his tweets.
The SpaceX report was the "immediate catalyst" for bitcoin's
sell-off, said Ben Laidler, global markets strategist at eToro.
"The broader driver is that crypto assets are not immune to the
deepening risk-off selling pressure seen across all asset
classes," Laidler added.
Joseph Edwards, head of research at Enigma Securities,
attributed the bitcoin price move to low volatility and a lack
of enthusiasm from retail investors.
Bitcoin had been hovering close to $30,000 in recent months,
having gradually recovered this year after dropping sharply in
2022 when various crypto firms collapsed, leaving investors with
large losses.
Crypto markets were boosted in June by BlackRock applying to
launch a spot bitcoin exchange-traded fund (ETF) in the United
States. Some investors interpreted that move as an indication
that the U.S. Securities and Exchange Commission would approve
spot bitcoin ETF applications from various asset managers,
including Grayscale.
"The big concern right now is that this might be a frontrun on
the outcome of Grayscale's lawsuit against the SEC; optimism on
that front has been keeping markets inflated above whether they
might otherwise be for much of the summer," Edwards said.
(Reporting by Elizabeth Howcroft; editing by Dhara Ranasinghe,
Elaine Hardcastle)
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