bitcoin found its footing on Thursday, stabilizing above a key technical level after briefly falling below $66,000 in early US trading. The largest cryptocurrency recently changed hands around $67,000, up about 1% in the past 24 hours.
The CoinDesk 20 index lagged, with ether (ETH), XRP, BNB, and solana (SOL) stable to slightly lower over the same period, perhaps a sign of continued caution in altcoins amid instability in crypto markets.
Cryptocurrency-related stocks rose modestly across the board, with bitcoin miners CleanSpark (CLSK) and MARA (MARA) standing out with gains of 6%. Meanwhile, the tech-heavy S&P 500 and Nasdaq 100 fell 0.3% and 0.6%, respectively.
On the political front, there were tentative signs of progress on the digital asset market structure bill. As CoinDesk’s Jesse Hamilton reported, White House-hosted talks between crypto industry representatives and bankers produced incremental movement, although no commitment has yet emerged.
At the same time, cracks stemming from the recent cryptocurrency crisis are still appearing. Blockfills, a Chicago-based cryptocurrency lender, as CoinDesk reported, is exploring a sale after enduring a $75 million credit loss during the recent price crash and temporarily suspending customer deposits and withdrawals last week. With cryptocurrency prices falling sharply in recent months, investors have been preparing for possible blowouts like those of Celsius and FTX in 2022. So far, however, the consequences seem contained: on the one hand, they mitigate the worst fears, but on the other, they avoid the kind of total failure that set the stage for the bottom of that brutal bear market and the beginning of the bull run of 2023-25.
Still, risks continue to lurk outside the cryptosphere that make investors reluctant to take risks.
Concerns about growing tension in credit markets erupted after private equity firm Blue Owl (OWL) permanently curbed repayments on its $1.7 billion retail-focused private credit fund. OWL fell 6% on Thursday, while shares of other major private credit managers, including Apollo Global (APO), Ares Capital (ARES) and Blackstone (BX), fell more than 5%.
Geopolitical tensions remain another obstacle, and the prospect of US military action against Iran remains in play amid an ongoing regional buildup. Crude oil rose another 2.8% above $66 per barrel, hitting its highest price since August.
Traders play defense
That caution is reflected in crypto derivatives markets, said Jake Ostrovskis, head of OTC at trading firm Wintermute. Many traders are buying downside protection while limiting upside participation, he noted, meaning they are effectively paying for insurance against another downside while limiting potential profits on an upside breakout.
The average cost basis of US bitcoin ETFs now sits near $84,000, leaving a large portion of ETF investors underwater (with a 20% paper loss on average) and potentially vulnerable to a “capitulation sale” if prices fall further.
Still, total ETF holdings remain within about 5% of their peak in bitcoin terms, suggesting institutions are trimming their exposure rather than rushing out.
