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Bitcoin plunged by $5,000 within a span of 24 hours as interest rates surged, marking a turbulent start to April for cryptocurrencies and related stocks, especially mining stocks.
The flagship cryptocurrency, Bitcoin, experienced a more than 6% decline on Tuesday, dropping to $65,150.00, resulting in a two-day loss of around 7%, according to Coin Metrics. This decline followed a trading price of approximately $70,000 on Monday morning. The drop was attributed to data indicating growth in the manufacturing sector for the first time since September 2022, coupled with cooling investor bets on June rate cuts. Bitcoin is currently down about 11% from its all-time high reached on March 14.
Ether also faced a decline, losing 6% to trade at $3,240.27.
Concurrently, the 10-year U.S. Treasury yield reached its highest level of the year, while the U.S. dollar, which typically has an inverse relationship with bitcoin, hit its highest level in nearly five months.
The decline in Bitcoin’s price was possibly exacerbated by a large bitcoin holder, or “whale,” who transferred more than 4,000 bitcoin to the Bitfinex exchange late Monday night. Data from CryptoQuant indicates a spike in the exchange’s reserves, which typically signifies increased selling activity, aligning with the sudden drop in bitcoin’s price late Monday night.
Stocks associated with bitcoin’s performance also experienced declines. Cryptocurrency exchange Coinbase dropped 4%, while software provider MicroStrategy, which largely trades as a proxy for the price of bitcoin, lost nearly 7%. The largest mining stocks, Marathon Digital and Riot Platforms, experienced losses of 7% and 6%, respectively. CleanSpark, one of the best-performing miners this year, slid 6%.
The month of April could prove to be tumultuous for cryptocurrencies and related stocks, particularly mining stocks, as investors are eyeing the bitcoin halving event, which is set to slash the reward, and therefore revenue, of bitcoin miners in the second half of the month. While this event could negatively impact miners’ performance, historically it has set bitcoin up for rallies of 300% or more in the following months.
Despite the recent downturn, Bitcoin is still up 53% for the year 2024.
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