Cryptocurrency Selloff Hits After Record Highs
Cryptocurrencies are experiencing a significant selloff just days after reaching fresh all-time highs. Bitcoin is down 1.4% over the past 24 hours to $122,494, reducing seven-day gains to 3.3% after hitting a record high. The world's largest cryptocurrency has still managed a 9.3% gain over the past 30 days.
Altcoins Follow Bitcoin's Decline
Among smaller cryptocurrencies, Ether fell 4.3%, XRP dropped 3.6%, and Solana slid 4%. Binance Coin was the notable outlier, up 2.4% early Wednesday and boasting an impressive 50% gain over the past 30 days.
The Debasement Trade Connection
Earlier this week, Bitcoin hit a record high just north of $126,000, boosted by the so-called debasement trade - the piling into assets seen as a hedge against a weaker dollar. This same phenomenon also propelled gold to a record high of more than $4,000 this week, effectively doubling over the past two years. Gold futures traded at $4,057 an ounce early Wednesday.
Dollar Strength Threatens Crypto Rally
Bitcoin has pared some gains since the start of the week and is now trading approximately 3% below its all-time high. One significant factor could be the recent strengthening of the dollar. The dollar climbed 0.3% against a weighted basket of other currencies to levels not seen since early August.
FxPro analyst Alex Kuptsikevich warned: "If this [dollar increase] becomes a trend, a deeper decline is inevitable." Despite the recent gains, the dollar index remains down nearly 9% since the start of the year.
Professional Traders Taking Profits
Kuptsikevich also noted that "pullbacks have become a frequent occurrence in the crypto market—an important consequence of the growing number of professional cryptocurrency traders who take profits on the way up." He added that retail investors are returning to the crypto market as Bitcoin keeps hitting new highs.
New Digital Asset Index Launched
In a significant development for institutional adoption, the S&P Dow Jones Indices announced the S&P Digital Markets 50 - a new index designed to meet growing investor demand for broad exposure to digital assets. The index will track 15 cryptocurrencies and 35 blockchain-linked stocks, representing a major step forward in cryptocurrency market maturation.
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