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Bitcoin fell beneath the $90,000 mark for the first time in seven months, signalling waning risk tolerance among investors across global financial markets.
Although the cryptocurrency began to recover slightly as US markets opened on Tuesday, Monday’s steep decline had already erased all gains made earlier this year. Bitcoin now trades nearly 30 percent below its October high of $126,000.
During European trading hours, it was down 0.5 percent at $91,338.47, after briefly slipping to an intraday low of $89,286.75.
According to CoinGecko, approximately $1.2 trillion has been wiped off the total valuation of the global cryptocurrency market over the past six weeks.
Analysts attribute the downturn to concerns over possible delays in interest rate cuts by the US Federal Reserve, coupled with a broader shift towards risk aversion in financial markets that have recently faltered after an extended rally.
Joshua Chu, co-chair of the Hong Kong Web3 Association, explained, “The cascading selloff is amplified by listed companies and institutions exiting their positions after piling in during the rally, compounding contagion risks across the market.” He added, “When support thins and macro uncertainty rises, confidence can erode with remarkable speed.”
Joseph Edwards of Enigma Securities noted that speculative investors, who had hoped for more favourable US regulatory developments, have started withdrawing, leading to persistent outflows from exchange traded funds (ETFs) and comparable investment vehicles in recent weeks. “The sell pressure here isn’t extraordinary, but it’s coming at a relatively weak point on the buy side … a lot of retail buyers were stung during the flash crash last month,” he remarked, referencing the October slump that triggered $19bn in liquidations across leveraged positions.
Crypto-focused firms such as Strategy, mining operators like Riot Platforms and Mara Holdings, along with exchange platform Coinbase, have all suffered declines amid deteriorating sentiment in the sector.
There has also been a surge in public crypto treasury firms this year, with smaller companies in unrelated industries positioning themselves as crypto proxies by declaring intentions to purchase and hold digital assets on their balance sheets.
However, Standard Chartered warned that a sustained dip below $90,000 could push around half of these companies’ Bitcoin holdings “underwater”—meaning assets would be worth less than their original purchase cost.
Collectively, publicly listed companies currently hold about 4 percent of all Bitcoins in circulation, as well as 3.1 percent of total ether supply, according to the bank.
Ethereum (ETH) has also faced sustained pressure, losing nearly 40 percent of its value since peaking above $4,955 in August.
“All in all, sentiment is pretty low in crypto and has been since the leverage wipeout of October,” commented Matthew Dibb, chief investment officer at Astronaut Capital.
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