Bitcoin steadies after record hack fallout, US midterms turbulence
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Crypto remains on shaky ground after a US$6.3 billion hack on digital-asset exchange Binance rocked the sector on Oct 29.
ILLUSTRATION: REUTERS
Bitcoin settled near recent lows after a bruising selloff on Nov 5 swept through cryptocurrencies and other risky assets, pressured by lacklustre chipmaker earnings and a Democratic sweep of the US Congress.
The largest cryptocurrency was trading mostly little changed at around US$75,600 on Nov 6, having tumbled more than 6% from a position above US$80,000 a day earlier. Smaller cryptocurrencies such as BNB, Ether and Solana were broadly flat.
A rebound in chipmakers propped up the stock market on Nov 6 as dip buyers emerged despite economic data that reinforced speculation the US Federal Reserve will boost rates in December.
“Bitcoin appears to be finding some relief after yesterday’s sharp selloff, although I would be cautious about calling this a reversal just yet,” Dean Chen, an analyst at crypto exchange Bitunix, said in an e-mail. “I would describe the current move as selling pressure easing, rather than fresh accumulation taking hold.”
Crypto remains on shaky ground after a US$6.3 billion hack on digital-asset exchange Binance rocked the sector on Oct 29, dampening investor enthusiasm for the asset class.
Volatility in the broader market has only worsened the blow, with routs in artificial intelligence stocks spilling over to crypto as a result of many of the industry’s mining companies pivoting to the AI industry in recent years.
“The selloff reflects growing doubts over the returns from huge AI spending, fears that tighter regulation could slow data-centre construction and a broader retreat from highly valued growth assets,” said Axel Rudolph, chief technical analyst at IG.
“Yet with stock markets continuing to slide, Bitcoin is so far holding its ground, suggesting buyers are stepping in to defend current levels. That relative strength could be an important test of whether Bitcoin is starting to decouple from the technology trade, rather than simply following it lower.”
Spot Bitcoin exchange-traded funds in the US recorded US$430 million in outflows on Nov 5, data compiled by Bloomberg show. The Fidelity Wise Origin Bitcoin Fund led the pack with about US$200 million of that figure, followed by BlackRock’s IBIT with about US$105 million in outflows.
“The selling does seem to be easing, but the recent bounce looks more like brief relief than sustained recovery,” said Samuel Leyne, co-head of crypto trading at Marex.
“You need a real catalyst to bring confidence back, whether that’s geopolitics cooling off, oil coming down or the macro picture improving,” he added.
“Until then, we have to watch stocks, ETF flows and the basis levels. Bitcoin needs to get back above $77,000 to build any momentum, and if equities keep sliding, US$75,000 is right back in play.” BLOOMBERG