Bitcoin’s attempt to recover $70,000 earlier in the week lasted approximately 48 hours.
The largest cryptocurrency fell to $65,735 in early Asia on Saturday, down 3% from the day before and down 2.8% over the week. Wednesday’s rally, which nearly hit $70,000, has now given up more than half of its gains as broader risk sentiment deteriorated during the US sessions on Thursday and Friday.
Altcoins took a harder hit. Solana fell 6.7%, ether fell 6.2%, dogecoin lost 5.1%, and XRP lost 4%. The losses pushed most major tokens into the red on a weekly basis, erasing the altcoin outperformance that had been the most encouraging sign of the week. BNB held up better than most, down just 2.5%.
The trigger seemed familiar. In the US session on Friday, the S&P 500 closed down 0.4%, the Nasdaq 100 fell 0.3% and the Dow fell 1.1%. Nvidia, still digesting its post-results reaction, lost another 4.2%.
A larger-than-expected 0.5% increase in producer prices added fuel, indicating inflationary pressure that may prevent the Federal Reserve from reducing rates in the near term. Block Inc.’s mass layoffs stoked broader anxiety that AI is beginning to displace jobs across the economy rather than simply create them.
Cryptocurrencies followed stocks lower, but as usual, with amplified magnitude. A 0.4% drop in the S&P turned into a 3% drop in bitcoin and a more than 6% drop in altcoins. The leverage that re-entered the system during Wednesday’s rally was removed on the way back down.
The irony is that this week’s institutional flows data was really strong.
US spot bitcoin ETFs added $1.1 billion in three days, putting them on track for their best week in months. But ETF inflows have not been enough to overcome broader macroeconomic headwinds.
“Over-analysis of short-term price movements is misguided,” Dom Harz, co-founder of bitcoin financial firm BOB, said in an email. “Bitcoin’s volatility is not a surprise, particularly for early investors who have experienced previous cycles. What is different this time is the type of capital behind the emerging asset class.”
Meanwhile, CryptoQuant data shows that reserves of the USDT stablecoin on exchanges have fallen from $60 billion to $51.1 billion over the past two months, a decline that the firm warned could trigger a “sell-off” if reserves fall below $50 billion.
Elsewhere, Strategy shares topped the list of large US companies by short-term interest volume, as markets increasingly question the sustainability of the company’s debt-financed bitcoin purchasing program.
And on the Ethereum side, large holders have started selling at a loss, with DAT firm ETHZilla officially abandoning its ETH accumulation strategy and changing its name to focus on real-world tokenized assets.
Bitcoin has now returned to the middle of the $60,000 to $70,000 range it has been stuck in since the February 5 crash. Wednesday showed that the top of that range is resistance. The question heading into March is whether the fund still holds.
