Bitcoin’s retreat from all-time highs: Has the rally ended?
Bitcoin (BTC-USD) is recovering some of its losses Wednesday morning after demand for spot bitcoin ETFs faltered. This drop follows Bitcoin’s all-time high of over $70,000 and immense inflows into recently approved spot bitcoin ETFs.
Yahoo Finance Reporter David Hollerith joins the Live show to contextualize the volatility.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor’s note: This article was written by Nicholas Jacobino
Video Transcript
AKIKO FUJITA: Bitcoin gaining back some of its earlier losses from the morning, hovering just over $64,000 after demand for spot Bitcoin ETFs faltered, sending the cryptocurrency to a two-week low. Joining us now is our very own David Hollerith. I mean, a two-week low, David. But we’re talking about record highs in between. So not necessarily a bad level, right? Is this just kind of a healthy pullback?
DAVID HOLLERITH: Yeah. I mean, Akiko, to your point, it’s been about a year and a half since we’ve seen a daily drop of this size in Bitcoin. But that being said, it is pretty common, or not common, I should say it happens to Bitcoin usually per year. In 2020, we saw a drop greater in this– of this magnitude over 8% three different times in 2021 and 2022, both to very different kind of markets for the asset.
We– We saw seven days that had greater daily drops than what we saw yesterday for each of those years. So this does happen. It’s– It’s not super common. And I think if we look at market data, what it shows us is that there was some pretty heavy outflows from the Grayscale Bitcoin Trust ETF, and then on top of that, there was a lot of leverage that’s been building up in the system since the beginning of the year.
So I think if you take all that together, kind of, it does seem to make sense what happened– to see what happened. Another thing that’s interesting is that Bitcoin has been fairly less correlated this year compared to other– other asset– other years. And we’re going to want to see what’s going on, what’s said at the Fed press conference today to see if there’s any kind of reaction or if crypto continues to kind of do its uncorrelated thing. So that’s sort of the next place people are watching.
RACHELLE AKUFFO: And David, it’s interesting because usually in the run up to Bitcoin halving, we tend to see Bitcoin prices spike. But when you add in this wrinkle, then of spot Bitcoin ETFs as well, and some people who have been holding on as long as they can and saw, you know, that hit 73,000 was like, that’s it. I can’t take it anymore. How much of that is playing into some of the price action that we’re seeing?
DAVID HOLLERITH: I mean, Rachelle, you– you bring up a great point, which is that in the past, people were– were always talking about Bitcoin rally periods, and it usually has to do with coming– You know, in the past, we look at the past cycles after the– the Bitcoin halving, which happens at the end of April this year. And we’re seeing this whole rally happen before that, so it is kind of uncharted territory. I mean, Bitcoin is a– is a fairly new asset. So a lot of it is uncharted territory.
But you know, I think what people are mainly looking at is what the ETF flows can tell us, and they are pretty helpful in terms of understanding just what is going on in the market. And on that note, you know, Bloomberg Intelligence, who’s been pretty on the– the crypto ETF calls, came out today saying that they saw the Ethereum ETF, which is also expected this year, had less favorable odds than the Bitcoin ETF. They gave that a 25% chance of– of– of happening, and that’s obviously at the forefront of investor minds also.
