Bitcoin fell sharply after a sell-off of major U.S. stock indices. Bitcoin has been correlated closely to the price movement of the Nasdaq index.
Luke MacGregor | Bloomberg | Getty Images
Bitcoin tumbled as much as 6% early Friday, hovering just above its critical $80,000 support level at one point, as investors continued their flight from risk-on assets to more defensive plays.
The largest cryptocurrency by market capitalization hit $80,548 at around 7:30 a.m. ET. The token’s plunge to that price — its lowest since April 11— marks a steepening of bitcoin’s decline following widespread cascading liquidations of highly leveraged crypto positions in October.
“Price action has been unimpressive across the large tokens, BTC dipping below the year-start price as long-time and larger holders of the token have become more active,” Citi analyst Alex Saunders said Friday in a note to clients. “ETF flows, the main driver of BTC prices, are also drying up, adding to the short-term performance worries.”
Bitcoin has since regained some of its losses to trade down 4% to $82,939.59, according to Coin Metrics. The cryptocurrency has fallen 12% since the beginning of the week and roughly 26% over the last month.
Bitcoin value year to date
The token’s slide follows mounting pressure in the U.S. stock market, which has led investors to rotate out of volatile assets like crypto and artificial intelligence stocks into safe-havens such as gold. The Nasdaq Composite fell 2% on Thursday, as a rally sparked by Nvidia‘s blockbuster earnings on Wednesday lost steam. Its fizzling underscores investors’ increasing scrutiny of sky-high AI valuations. Investors in AI also often hold bitcoin, linking the two trades.
Cryptocurrency stocks were also in the red. Strategy, a bitcoin treasury firm, has fallen 2% on the day and is now down 42% over the past month. American Bitcoin and Riot Platforms shed 7% and 4% in Thursday’s session, respectively.
Bitcoin is now down 9% since the beginning of the year, despite smashing several price records following President Donald Trump’s inauguration in January.
Amid the administration’s pro-crypto policies, it last sailed to a record price just north of $126,000 in early October. But, it’s now more than 30% off that high.
“We’re in very oversold territory for bitcoin right now,” Sebastian Pedro Bea, chief investment officer at crypto asset management firm ReserveOne, told CNBC.
