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Bitcoin drops to new two-month low as world markets sell off

(Qnnflash) – Bitcoin, the leading cryptocurrency, has experienced a fresh downturn, hitting a new low for the past two months. The cryptocurrency market witnessed a shift in its recent narrow range as global markets grappled with risk-averse sentiment.

In a notable decline on Thursday, bitcoin faced a significant drop of 7.2%, marking its most substantial single-day decrease since November 2022 when the prominent exchange FTX encountered a collapse. This downward trend persisted into Friday, with bitcoin plummeting to a two-month low of $26,172 during Asian trading hours. This was the lowest value observed since June 16. However, the cryptocurrency managed a partial recovery by 0835 GMT, reaching $26,441, translating to a 0.8% decline for the day.

The global financial landscape has been marked by widespread selling, with major Wall Street indexes concluding Thursday on a lower note. Furthermore, Asian shares have entered their third consecutive week of losses, reflecting concerns regarding China’s economic state and apprehensions about the extension of higher U.S. interest rates due to a resilient economy.

Ether, the second-largest cryptocurrency, remained relatively stable at $1,685.20. Similar to bitcoin, it also witnessed a significant drop on the preceding Thursday.

The decline in cryptocurrency values was attributed by some analysts to a report from the Wall Street Journal indicating that Elon Musk’s SpaceX had liquidated its bitcoin holdings after a valuation markdown of $373 million. Musk, known for his influence within the crypto community, has previously impacted bitcoin prices with his tweets. This revelation about SpaceX’s actions was termed the “immediate catalyst” for the bitcoin sell-off, as per Ben Laidler, the Global Markets Strategist at eToro.

Laidler further explained that while this specific incident played a role, the broader decline could be traced back to the fact that cryptocurrencies were not shielded from the overall risk-off selling pressure prevalent across various asset classes.

Joseph Edwards, the Head of Research at Enigma Securities, attributed the fluctuations in bitcoin’s price to two factors: the notably low volatility of the market and a lack of enthusiastic engagement from retail investors. Bitcoin had been hovering around the $30,000 mark in recent times, gradually recovering from a significant drop in value throughout 2022, which stemmed from collapses of various crypto entities, leaving investors with substantial losses.

During June, the cryptocurrency markets received a boost following BlackRock’s move to apply for the launch of a spot bitcoin exchange-traded fund (ETF) in the United States. This development was perceived by some investors as an indicator that the U.S. Securities and Exchange Commission might approve spot bitcoin ETF applications from different asset management firms, including Grayscale.

Edwards expressed concerns that the current downturn might be tied to the outcome of Grayscale’s lawsuit against the SEC, suggesting that optimism regarding this matter had kept the markets inflated over the summer beyond their natural state.

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