Benchmark cryptocurrency bitcoin (BTC) extended further losses this morning, falling 0.9% against the US dollar after a bearish Sunday session, bringing week-to-week losses to around 8.5%.
At the time of writing, the BTC/USDT pair changed hands around USD 27,330.
Bitcoin Sees Further Losses – Source: currency.com
Bitcoin has been one of, if not the most, successful asset class in 2023, surging over 80% to $31,000 in mid-April after topping $30,000 for the first time in 10 months.
As the global benchmark cryptocurrency, bitcoin aka digital gold has shown close alignment with the physical variation of 2023, due to their alignment as a relative safe haven status amid a volatile streak in the financial markets.
But when things cool down and a full-scale meltdown is avoided, investors can redirect their cash into income-producing stocks and the money markets.
Gold has also been in retreat mode after a strong rally in 2023, but has remained quiet at $1,980 this Monday.
TickMill Group market analyst James Harte said: “Both gold and silver are under pressure in early European trade on Monday as the focus remains on fresh Fed tightening expectations ahead of the upcoming May FOMC (Federal Open Market Committee).
As for bitcoin, Harte reasoned that a swing in Fed sentiment toward further tightening has put cryptoassets under heavy selling pressure.
“During the duration of the SVB collapse and the fallout of the banking sector, expectations of interest rate hikes had subsided sharply, leading to a new surge in demand for crypto,” Harte said. “However, in recent weeks market prices have shifted back in favor of a further 0.25% (rate) increase in May along with an increased likelihood of a further increase in June.”
Ethereum (ETH) also cut a bearish trajectory this morning, falling 1% to US$1,845 after a 0.6% decline on Sunday.
Blue-chip altcoins have generally fallen in value, with Cardano (ADA), Digecoin (DOGE), Solana (SOL), Avalanche (AVAX) posting double-digit week-on-week losses.
Asset funds see outflows
Digital asset investment products saw outflows totaling $30 million last week, according to data provided by CoinShares today.
These outflows mark the end of six solid weeks of inflows amid a strong rally in crypto markets.
However, an inflow of USD 17 million of long-dated ETH products partially offset outflows of USD 53 million of long-dated BTC products.
Ether supply correlated with the recent upgrade of the Shanghai Protocol which led to a strong rally in the second largest cryptocurrency.
CoinShares noted: “The outflows began the previous Friday (April 14) when Bitcoin reached the highly psychological level of $30,000, suggesting that the recent sell-off was a result of profit-taking, especially in the absence of any macroeconomic triggers.”
The global cryptocurrency market cap fell 0.8% overnight to $1.16 billion, while the total value of decentralized finance (DeFi) is currently around $48.5 billion, also down 0.8%.
