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Bitcoin hit its lowest level in 20 months as a deepening sell-off in tech stocks weighed on the world’s largest cryptocurrency.
The price of the digital asset sank below $60,000, which traders have viewed as an important support level for much of the past two years. Down as much as 5.4 per cent to $59,023.11 on Wednesday, bitcoin hit its lowest price since October 2024.
The plunge follows a sell-off in the stocks of large tech companies this week as traders bet that central bankers in the US would raise rates to combat inflation. Higher rates can weigh on risk sentiment, forcing investors to question stretched valuations and flee to relatively safer assets.
Wall Street was still on shaky footing and on track for a three-day losing streak: the S&P 500 was down 0.3 per cent in Wednesday afternoon trading and the Nasdaq Composite had fallen 0.8 per cent. Asian markets also whipsawed earlier on Wednesday with stocks of chipmakers such as Samsung Electronics and SK Hynix weighed down by investors’ diminished appetite for assets with relatively stretched valuations.
In recent years, crypto has traded in line with equities, but that relationship is now showing signs of strain. Tokens such as bitcoin and solana are down 32 and 47 per cent this year, respectively, and have not recovered even when stocks have rallied.
That dynamic is in part due to diminished demand among retail investors for cryptocurrencies. Those traders have instead rushed to chase volatility triggered by AI-related bets in equities markets.
“Sentiment remains weak as notable public offerings and AI stocks have taken centre stage,” said Gerry O’Shea, head of global market insights at Hashdex, a crypto asset manager.
Analysts do not expect any major catalysts to change the trajectory of the crypto market at the moment. US capital markets are still digesting the world’s largest public offering, SpaceX, which listed on the Nasdaq earlier this month.
Elon Musk’s AI and rockets company is the first of several marquee offerings in the sector with OpenAI and Anthropic expected to follow.
Meanwhile, a major piece of legislation governing digital assets in the US has languished in the Senate. The so-called Clarity Act has faced serious opposition from banks and has so far lacked enough bipartisan support to succeed.
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