Bitcoin briefly dipped below $60,000 for the first time in more than a month, with volatility increasing ahead of a blockchain software update that has long been seen as a potential boost to the cryptocurrency.
The original digital asset fell as much as 5% to $59,888 before paring the decline. Bitcoin has lost about 18% of its value since hitting a record high of $73,797 on March 14. Other smaller cryptocurrencies such as Ether, Solana and Dogecoin also fell on Wednesday. Cryptocurrency-related stocks including MicroStrategy, Coinbase and Marathon Digital also fell.
The drop comes ahead of Bitcoin’s highly anticipated code update on Friday. The quadrennial event, called the halving, is seen as a positive catalyst for the cryptocurrency’s price as it reduces the supply of new tokens from the blockchain. But concerns over whether the halving has already been priced in against the backdrop of a risk-free investment environment have kept prices on the back foot.
Anticipate the halving event
“People are looking to move away from risk to see if the halving will be a market-moving event or if it’s not that important compared to ETFs,” said Nathaniel Cohen, co-founder of Indigo Fund. “There’s an additional macro factor that’s putting more pressure on risk assets, which is the tensions in the Middle East.”
Bitcoin’s price decline accelerated over the past week due to a wave of liquidation in long positions on the digital asset. Nearly $780 million in bullish bets on the cryptocurrency were liquidated in the space of 24 hours on Friday. The cryptocurrency’s slide was compounded by some investors’ shift to risk amid Iran’s attacks on Israel.
With crypto borrowing down in the latest move, the long-term outlook for Bitcoin remains largely bullish, according to some market participants.
“We continue to see long-term buying across our derivatives desk as our clients anticipate higher prices in the second half of the year,” said Ravi Doshi, Head of Markets at FalconX.
