Bitcoin price marched back above $70,000 on Friday morning, erasing part of the losses seen over the past two days. However, its momentum is quickly faltering as Asian tech stocks fall.
Summary
- Bitcoin rebounded above $70,000 after an 8% drop, supported by dip buying despite rising international tensions and inflation concerns.
- Risk sentiment weakened as Asian and US tech stocks fell, reflecting broader pressure on risk assets amid strong inflation data and a hawkish Fed outlook.
- US spot Bitcoin ETFs recorded more than $250 million in two days, indicating a pause in institutional demand after a week of strong inflows.
After falling more than 8% to a weekly low of $69,298 on Thursday, the price of Bitcoin (BTC) rebounded back above the $70,000 psychological mark that many analysts say serves as a key anchor for investor confidence. The bellwether was trading at $70,749 at press time with a market capitalization of $1.41 trillion.
The price of Bitcoin rose as bulls bought a dip below $70,000, which came after news broke of an Israeli attack on Iranian energy sources, sparking fears of global inflation as oil prices hit record highs.
At the same time, risk sentiment deteriorated amid a string of weak economic data. This coincided with stronger-than-expected PPI data and Federal Reserve Chairman Jerome Powell suggesting the central bank intends to hold interest rates as long as inflation remains high.
Although Bitcoin managed to regain the $70,000 level of psychological support, several obstacles may stand in its way for further gains.
First, Asian technology stocks are so far trading lower on Friday morning. Notably, Japan’s Nikkei 225 fell 1,866 points or 3.38%, while China’s Shanghai Composite fell 0.50%. Yesterday, US technology stock markets also showed similar weakness, with the Dow Jones Industrial Average closing down 0.44%, while the S&P 500 and Nasdaq 100 were down more than 0.25% each. The only exception was the Russell 2000 Index, which rose 0.65%.
Cryptocurrencies often mirror the trend followed by these technology stocks, as both are highly sensitive to currency and interest rate expectations.
Second, investors appear to be turning to Gold, which jumped more than 2% today as it retreated above $4,700, cementing its position as a safe haven amid broader macroeconomic and global uncertainty. Silver also saw strong interest, rising more than 3% to $74.
Third, the institutional demand for Bitcoin seems to be taking off. Data from SoSoValue shows that US spot Bitcoin ETFs have recorded a net outflow over the past two days, with outflows exceeding $250 million.
While the outflow is small considering the $1.16 billion in revenue they recorded in the seven straight days just prior to this change, investors may take this as a sign of temporary fatigue in the current session.
Disclosure: This article does not represent investment advice. The content and materials presented on this page are for educational purposes only.
