FX168 Financial News (Asia Pacific) News US Bloomberg recently wrote on Thursday (May 2) that the sharp decline in Bitcoin has aroused investors' interest. They believe that large fluctuations in this digital token may be a precursor to wider changes in risk appetite in the global market.
Following a sharp drop of nearly 16% in April, Bitcoin fell about 4% over the past two days, the biggest monthly decline since Sam Bankman-Fried's FTX digital asset empire collapsed in November 2022.
In the Asian market on Thursday, the transaction price of Bitcoin in Singapore was $57,359, which is about a two-month low.
Some investors search Bitcoin transactions for clues that could impact the liquidity dynamics of other assets. Bitcoin prices have declined over the past few weeks as the Federal Reserve hinted that interest rates would stay high for a longer period of time. This statement by the Federal Reserve pushes up US Treasury yields and the US dollar, thereby tightening the financial environment.
(Screenshot source: Bloomberg)
Charlie Morris, chief investment officer at ByteTree Asset Management, wrote in a report: “Bitcoin is our favorite canary. This is a warning of future trouble for financial markets, but we are confident it will rebound at some point.”
Morris added: “The recent strengthening of the US dollar may indicate future market tightening.”
(Screenshot source: Bloomberg)
In mid-March, Bitcoin, the largest digital asset, hit a record high of nearly $74,000, driven by companies such as BlackRock Inc. (BlackRock Inc.) and Fidelity Investments (Fidelity Investments), which injected large amounts of capital into US-listed spot Bitcoin exchange-traded funds (ETFs). #现货比特币ETF #
However, demand for these products gradually subsided, and the market failed to receive a boost from the launch of spot Bitcoin and Ethereum ETFs in Hong Kong this week. The net asset value of some US portfolios has been discounted to record levels, highlighting the challenges Bitcoin's volatility can present.
According to data collected by Bloomberg, in the past ten years, Bitcoin fell four times in April, three of which predicted an average fall of 18% in May.
However, analysts pointed out that if inflationary pressure in the US abates and the market restarts betting that the Federal Reserve's position is much more relaxed, then cryptocurrencies and other speculative investments may be mitigated somewhat.
Federal Reserve Chairman Jerome Powell (Jerome Powell) maintained hopes of cutting interest rates this year after the latest meeting on Wednesday. But he also acknowledged that the explosion of inflation has weakened confidence that price pressures are fading.
You Wei Yang, chief economist at cryptocurrency mining company Bit Mining, said: “In the next three to four months, the market will be less optimistic and more risk-oriented. The market will keep a close eye on inflation, employment, and economic data to cope with any unexpected shocks or gain confidence in potential interest rate cuts.”