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This week’s crypto rally appears to be losing momentum after double-digit gains.
Ozan Kose/AFP via Getty Images
A recent rally in cryptocurrencies lost momentum on Thursday, with the price of
Bitcoin
and other cryptocurrencies slide back as investors digested news that
Tesla
had sold the lion’s share of its digital assets.
The price of Bitcoin fell 3% in the last 24 hours to below $23,000, after going as high as $24,200 on Wednesday. The biggest digital asset has given up some gains but remains more than 15% higher than a week ago as a result of a rally that has brought the total market capitalization of cryptocurrencies back above $1 trillion.
The crypto market capitalization reached nearly $3 trillion in November 2021 — when Bitcoin was nearly three times more valuable than it is now — and bottomed out near $800 billion in the depths of a selloff that reached its most severe last month.
Digital assets remain in the dumps after a price crash, but venture capital funding in the space remains strong and fears of another “crypto winter” have been tempered by optimism that the industry will consolidate and grow stronger.
Bitcoin’s latest drop comes despite strength in the stock market. In theory, cryptos should trade independently of the regular financial markets, but have been shown to be largely correlated with stocks, and especially technology stocks. The technology-heavy one
Nasdaq
ended 1.6% higher on Wednesday, and futures tracking the index hinted at more gains on Thursday.
A disappointing news for the digital assets area came in tandem with the income from
Tesla
(ticker: TSLA), the electric car giant run by high-profile crypto fan Elon Musk. Tesla sold about 75% of its 42,000 Bitcoins last quarter for about $30,000 each — about the same price it paid for the crypto in early 2021.
Selling at these levels is an impressive feat considering the price of the token’s furry depths below $18,000 in the same three-month period – Bitcoin’s worst quarter since 2011, a year in which it crossed the $1 threshold for the first time. Tesla continues to own about $241 million worth of Bitcoin at current prices, but the recent sale — which helped it avoid more than $300 million in losses from writing down its holdings — represents a high-profile capitulation during this turbulent period.
In other cryptos,
Ether,
the second-largest digital asset, fell 5% to $1,500. The token underlying the Ethereum blockchain network has recently outperformed Bitcoin, outpacing its larger peers’ declines as the current rally loses momentum.
Among altcoins, or smaller cryptos,
Solana
fell 9% and
Cardano
was 8% lower. Memecoins – originally intended as internet jokes – were correspondingly weaker, with
Dogecoin
and
Shiba Inu
drop of 7% and 8% respectively.
Write to Jack Denton at [email protected]
