Bitcoin plunges 5pc to $29,827 as sell-off resumes

Bitcoin fell below $30,000 again Tuesday as the cryptocurrency’s recent sell-off resumed.

The largest cryptocurrency by market cap slumped 4.8% to $29,827.50, according to Coin Metrics. Bitcoin had gained more than 4% to trade above $31,000 in the previous session. Ether dropped 4% to $1,784.43 on Tuesday.

The moves followed a report that the Securities and Exchange Commission is investigating the possibility that the BNB token, a cryptocurrency issued by Binance, could be categorized as a security. BNB led the market-wide sell-off. It’s currently down 6%.

Bitcoin has lost more than half of its value from an all-time high of $68,982 reached in November. The digital token had suffered eight straight weeks of losses and dropped below $30,000 last month after the Terra collapse.

Cryptocurrencies have been moving in lockstep with equities, which have had a rough year amid fears of rising rates, surging inflation and the risk of a slower economy or outright recession. The S&P 500 has fallen more than 13% in 2022, while the tech-heavy Nasdaq Composite has been hit harder, down 23% this year.

“BTC’s increased correlation with equity, stagnated transactions growth ... and the emergence of ETH as a store of value rival could weaken BTC’s dominance,” Bernstein analyst Gautam Chhugani, said in a recent note.

Still, some on Wall Street see a rebound in bitcoin on the horizon. JPMorgan’s Nikolaos Panigirtzoglou said last month that he sees about 30% upside for the cryptocurrency after the recent washout.

Bitcoin faces another hurdle this week with the closely watched consumer price index reading, which is due out Friday. If the reading for May is cooler than April’s numbers, as expected, some could interpret it as a sign that inflation has peaked.

Some Fed members have said rate hikes could continue past this summer, Yuya Hasegawa, a crypto market analyst at Japanese bitcoin exchange Bitbank, noted. If the CPI rebounds in May, the market will start to price in that scenario and could cause a shock for risk assets, he said.

“How much a 50bp rate hike by the Fed in May could suppress prices is still uncertain,” said Hasegawa. “So it will be difficult to open new positions until Friday’s CPI announcement. In other words, bitcoin could continue to fluctuate sideways until then, but the market should brace for impact.”

SOURCE: REUTERS