Bitcoin hits two-week low amid declining risk appetite after crash

Bitcoin continued its decline on Tuesday after falling in October, as a strengthening US dollar and decentralized finance manipulations further pressured the largest digital asset. This is reported by UNN with reference to Bloomberg.

Details

Bitcoin fell as much as 2.5% to $104,179, its lowest level in over two weeks. Ether, the second-largest token, fell 3.4% to below $3,500, deepening its retreat from recent highs.

The declines came three weeks after a historic liquidation that wiped out billions of dollars in leveraged cryptocurrency positions. Since then, investors appear reluctant to bet on Bitcoin's return.

Traders are "hesitant to re-engage in large investments," market maker Keyrock said in a note. Open interest in perpetual Bitcoin futures contracts stands at about $68 billion, roughly 30% below its October peak. And liquidations continue: even in the last 24 hours, selling pressure across all cryptocurrencies has wiped out $1.2 billion in bullish bets, according to CoinGlass data.

Meanwhile, investors have withdrawn more than $1.8 billion from spot Bitcoin and Ether exchange-traded funds over four trading days.

The macroeconomic backdrop is not favorable. Expectations for a December interest rate cut by the US Federal Reserve have largely been dampened, signaling conditions for higher rates to persist for longer, which "increases the opportunity cost of holding non-yielding assets like Bitcoin, and also dampens short-term speculative momentum," said Lin Tran, market analyst at XS.com.

Further uncertainty comes in the form of decentralized finance crises, including the Balancer exploit, which saw over $100 million in digital assets drained from the protocol on Monday.

"The crypto market is facing several short-term headwinds today," said Derek Lim, head of research at Caladan. "This is hitting a market that is already fragile after the massive liquidation in October and a series of hacks."

Additions

Earlier, fintech expert and co-founder of Concord Fintech Solutions, Olena Sosiedka, warned that after the rapid growth in cryptocurrency value that occurred in September – early October, Bitcoin would enter a "breathing" phase.

"Obviously, Bitcoin will fluctuate in the coming weeks," the fintech expert predicted.

At the same time, according to her, if inflows into ETFs (investment funds that allow large players to buy Bitcoin through traditional exchanges) remain at the current level, new records are only a matter of time.

However, Olena Sosiedka warned that a sharp slowdown in institutional interest or a change in the Fed's policy could provoke a 10-15% correction in the coin's value.

"The market is very emotional right now, so it's important not to chase a high price, but to act strategically and gradually, with a cool head," advises the fintech expert.