Bitcoin Retreats from Record High Amid Speculation of Market Froth
Bitcoin Trades Lower in Asian Market
The world’s largest digital asset, Bitcoin, experienced a retreat from its recent record high as concerns over speculative froth in global markets intensified. In Asian trading on Friday, Bitcoin saw a decline of as much as 5.6% before recovering slightly, currently changing hands at $67,300 (as of 1:43 p.m. in Singapore). Earlier, the token had reached an unprecedented peak of almost $73,798 a day before.
Moderated Growth in Bitcoin and Top 100 Tokens
Both Bitcoin’s surge this year and the performance of the top 100 tokens, including Ether, BNB, and Solana, have been subject to a moderation of roughly 60%.
Reevaluation of Federal Reserve Monetary Policy
Recent evidence of persistent inflationary pressure in the US has prompted investors to reassess their bets on looser Federal Reserve monetary policy. The resulting caution has affected not just cryptocurrencies like Bitcoin but also global stocks and bonds.
Expert Opinion Raises Bubble Concerns
In a recent Bloomberg Television interview, Bank of America Corp. Chief Investment Strategist Michael Hartnett suggested that a bubble is forming in the record-setting surge of the technology sector’s “Magnificent Seven” stocks and the all-time highs seen in cryptocurrencies. Other voices on Wall Street are joining the debate, expressing concerns about potential vulnerabilities in various markets.
Supporters Defend Bitcoin Amid Growing Skepticism
Bitcoin enthusiasts, on the other hand, highlight around $12 billion of net inflows into dedicated US exchange-traded funds, along with an anticipated reduction in the token’s supply growth, to support the long-term prospects of the cryptocurrency.
Inflation Data Adds to Bitcoin’s Headwinds
Worries over the US Federal Reserve’s efforts to tackle inflation intensified after a report on Thursday revealed a surge in US producer prices. These concerns, combined with the rise in US yields and the strengthening US dollar, affected Bitcoin’s performance in the market.
Crypto Derivatives Market Shows Signs of Cautious Sentiment
As Bitcoin stumbled, the derivatives market also exhibited circumspection, which has recently been a hotbed of bullish enthusiasm. Coinglass data reveals that $526 million worth of bullish crypto wagers were liquidated in the past 24 hours—the most significant purge in approximately two weeks. Additionally, the funding rate for Bitcoin perpetual futures, which are preferred by speculators, declined according to CryptoQuant figures.
