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Key Takeaways
- Altcoins, digital asset treasuries, crypto-linked stocks were punished this week as an index measuring “fear and greed” descended to “extreme fear” levels.
- Bitcoin ETF investors are “underwater,” a strategist said.
This week’s crypto bloodbath hasn’t just worried bitcoin owners. It’s also sparked fresh anxieties about the future of digital assets.
The price of bitcoin plunged yesterday to near $60,000, marking one of its worst single-day declines in the past decade. Though the world’s largest cryptocurrency by market value has been recouping some lost ground so far Friday—it was recently trading around $70,000—the week’s losses are still tracking in the double-digits. Other crypto assets have also seen pronounced declines.
Altcoins including ether and solana have seen losses of around 25%; Hyperliquid’s native token, up about 8%, was a lonely bright spot. Digital asset treasury companies took a beating: Strategy (MSTR), Bitmine Immersion Technologies (BMNR) and Twenty One Capital (XXI) have all seen double-digit pullbacks over the past five trading days.
WHY THIS MATTERS TO YOU
The emergence of artificial intelligence appears to be killing software stocks, and bitcoin, suggesting new technologies are making cryptocurrencies look outdated.
Shares of Coinbase Global (COIN), Robinhood (HOOD) and Circle (CRCL) have also also seen double-digit pullbacks this week, though they, too, rebounded Friday. Gemini (GEMI), the Tyler and Cameron Winklevoss-founded crypto exchange said it planned to shutter operations overseas and cut 200 people from its workforce as part of a broad restructuring.
CoinMarketCap’s Crypto Fear and Greed Index, which is calculated using factors including price momentum, volatility, and user engagement levels, remains at “extreme fear” levels. Lately, analysts have started to link bitcoin’s carnage to that seen in software stocks. That has given rise to a fresh set of anxieties around digital assets.
Bitcoin has been broadly correlated with, or moving alongside, major asset classes including the tech-heavy Nasdaq 100 index, but it has been holding hands with software stocks lately, BTIG chief market technician Jonathan Krinsky said on CNBC Friday morning.
The $60,000 low was a “pretty good level to trade against,” he said. “Now on the upside you really need to see it back above $73,000—that was the key breakdown level.”
Bitcoin ETFs saw roughly $1.25 billion in net outflows in the past three days, with some $434 million of that coming yesterday, according to Farside Investors. But more than 90% of the assets under management between those funds is “hanging tough,” Bloomberg analyst Eric Balchunas said in a social media most Friday morning, indicating that they mostly haven’t sold.
As the price of bitcoin tumbled, some investors homed in on Strategy’s average purchase price. But others think more important numbers are those associated with big crypto ETFs like the iShares Bitcoin Trust (IBIT). The average bitcoin purchase price for those funds is at $90,000, according to Jim Bianco of Bianco Research, meaning ETF holders are “underwater” with some $15 billion in unrealized losses.
This article has been updated since it was first published to reflect new market data.
