- October 4, 2023
- Posted by: [email protected]
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Bitcoin and various cryptocurrencies faced a decline on Tuesday, erasing some recent gains amid rising bond yields and the lackluster debut of a new cryptocurrency exchange-traded fund (ETF). Bitcoin’s price dipped 3% within the last 24 hours, slipping below $27,600 after a recent surge that briefly pushed it to $28,500 on Monday. Despite this setback, Bitcoin remained above the $26,000 mark, which had characterized its trading range for nearly two months, characterized by low volatility and trading volumes.
Katie Stockton, managing partner at technical research firm Fairlead Strategies, noted a short-term bullish shift in Bitcoin’s performance when it broke above the 50-day moving average at around $26,500. However, she highlighted strong initial support at approximately $25,200, maintaining a long-term neutral stance.
The crypto market’s retreat coincided with an increase in Treasury yields in recent days, which also impacted traditional assets like the Dow Jones Industrial Average and the S&P 500. As yields on the 10-year U.S. Treasury note climbed to 4.7%, reaching levels last seen in 2007, the higher returns on safe government debt reduced demand for riskier investments such as stocks and cryptocurrencies.
Adding to the market’s concerns was the underwhelming launch of an exchange-traded fund (ETF) that holds futures contracts for Ethereum (Ether), the second-largest digital asset after Bitcoin. While Bitcoin futures ETFs have been available since 2021, seven ETFs focused on Ether futures started trading on Monday after receiving approval from the Securities and Exchange Commission (SEC).
Bloomberg ETF analyst Eric Balchunas observed that trading volume for these Ether futures ETFs was relatively low, with less than $2 million in value exchanged in the first 15 minutes. In contrast, the ProShares Bitcoin Strategy ETF, the first such product to trade in the U.S., saw $200 million in volume within its initial 15 minutes.
The lackluster debut of the Ether Futures ETFs raised concerns among traders about waning investor interest in cryptocurrencies. Additionally, it cast doubt on the significance of the much-anticipated spot Bitcoin ETF, which analysts had previously viewed as a major catalyst for the crypto market. Hal Press, founder of crypto hedge fund North Rock Digital, suggested that the importance of the potential Bitcoin spot product might have been overstated given the current market conditions, characterized by low retail trading, low crypto interest, and unfavorable macroeconomic factors.
Beyond Bitcoin, Ether also experienced a 4% drop to $1,660, while smaller tokens displayed mixed performance, with Cardano declining by 2% and Polygon increasing by 1%. Memecoins, such as Dogecoin and Shiba Inu, faced weaker performance, with Dogecoin dropping by 3% and Shiba Inu falling by 4%.
