Bitcoin’s week was turbulent, dropping by 11%.
Bitcoin’s Worst Week of 2023: Over $1 Billion Liquidated in 24 Hours
Bitcoin has experienced one of its most challenging weeks in 2023, with more than $1 billion of the cryptocurrency liquidated in the past 24 hours alone.
Currently valued at around $26,000, Bitcoin is approaching lows last seen during a June dip. This represents an 11% decline since the beginning of the week and nearly 8% losses in just the past day. Other cryptocurrencies have also struggled this week, with almost all of the 100 largest coins in the red.
Rising Rents Put Upward Pressure on Inflation
Ethereum, the second-largest cryptocurrency, experienced a 5.5% drop on Friday, reaching approximately $1,660. Ripple, on the other hand, plunged nearly 20% since the start of the week, falling to about 51 cents per coin.
It appears that the pullbacks in the crypto market are influenced by broader macroeconomic factors, as well as a report about SpaceX. The market has been rattled by rising interest rates as the Federal Reserve continues to tighten monetary policy, at least for now.
“U.S. interest rates are rising to multiyear highs. The 10-year yield has pushed to 15-year highs. This is bearish risk assets in general,” Decentral Park Capital trader Lewis Harland told CoinDesk. “If this sell-off in bonds continues, we could see continued negative price action in risk assets into the weekend.”
In addition, concerns have been growing about China’s economic situation and its potential impact on the global economy. China is currently facing several economic problems and is attempting to downplay the severity of the situation. This week, it unexpectedly slashed rates, signaling worries about the country’s economic outlook. The People’s Bank of China lowered the rate on its one-year loans to 2.5% on Tuesday, marking the second cut since June.
Furthermore, China announced the suspension of the publication of the youth unemployment rate this week. While the official reason given was the need for better calculation, it is worth noting that youth unemployment has reached new highs in recent months. Additionally, the country is grappling with a property crisis, exemplified by the bankruptcy protection filing of massive property developer China Evergrande on Thursday.
Given the interconnectedness of the U.S. and Chinese economies through trade, there is concern that if Beijing’s economic outlook continues to darken, it could have repercussions stateside.
The Wall Street Journal reported this week, citing documents, that SpaceX wrote down the value of its bitcoin holdings by over $370 million last year and in 2021, and has since offloaded the cryptocurrency.
Moreover, digital assets have become increasingly linked to traditional stocks, which have been experiencing a decline this week. During downturns, investors typically seek safer and more stable stores of value, abandoning riskier investments. Bitcoin and other cryptocurrencies are still considered a relatively new asset class.
In fact, the stock market is on track to record its worst week since March. The Dow Jones Industrial Average has shed over 750 points since the beginning of the week, representing a 2% decline. The tech-heavy Nasdaq is down by approximately 2.5%, and the S&P 500 has fallen by about 2% over the past five days.
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Despite the decline this week, Bitcoin remains profitable for the year and has delivered better year-to-date returns compared to traditional assets.
After a challenging 2022 marked by regulatory crackdowns and the collapse of FTX, Bitcoin has risen by 56% since the start of January. Ethereum has seen a 38% increase since the beginning of the year, while Ripple has experienced a 48% surge.
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