Bitcoin Slides 6%, While Altcoins Shine
Bitcoin witnessed a decline of up to 6.5% on Tuesday, marking its largest one-day drop in two weeks. This drop occurred amidst a wave of selling impacting cryptocurrencies and other risk assets like stocks. At present, the price stands at $63,419, down by 5.86% from its recent high, with ether also falling by 6.39% to $3,283.
Bitcoin still demonstrates a 52% gain for the year, attributed to investors flocking to U.S. exchange-traded funds backed by spot bitcoin. However, its recent record high of nearly $74,000, reached last Thursday, triggered profit-taking alongside U.S. data releases suggesting a potential decrease in Federal Reserve interest rate cuts for the year.
Over the past week, bitcoin has faced a nearly 9% decline, marking its most substantial week-on-week decrease since last September, while ether has experienced a 13% loss following an upgrade to the underlying Ethereum network.
Resilience in the Broader Crypto Complex
Despite the decline, performance across the broader crypto complex has not been uniformly weak. Galaxy Digital’s affiliate, Galaxy Asset Management, reported a 24.8% increase in preliminary assets under management to $10.1 billion as of the end of February, primarily driven by market appreciation.
Smaller tokens, or “altcoins,” have attracted significant attention. The sol token of the Solana network surged by 19% in the latest week, while Avalanche’s Avax coin rose by 17%, according to Coingecko.
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Analyst Insight and Market Trends
“In light of bitcoin’s recent all-time high and subsequent correction, we anticipate a period of market recalibration as investors seek equilibrium amidst unprecedented inflows into spot bitcoin ETFs,” noted analysts at exchange Bitfinex.
Coins associated with AI-focused crypto projects have also seen a rise, paralleling the surge in tech stocks like Nvidia, driven by a growing investor appetite for applications like machine learning.
Market Reaction
On Tuesday, shares of Coinbase slid 5.2%, while crypto miners Riot Platforms and Marathon Digital fell 3.7% and 4.2%, respectively. Shares in software firm and bitcoin buyer MicroStrategy dropped over 11%. MicroStrategy revealed its purchase of 9,245 bitcoins as of Monday for $623 million, utilizing proceeds from a recent convertible offering that raised approximately $600 million.
Flows of capital into the 10 largest bitcoin ETFs have slowed over the past few days. According to LSEG data, $178 billion flowed into major ETFs on Monday, compared with well over $400 billion on several days last week.
