Bangkok Post – Bitcoin declines 20% amid trade, stagflation woes
Ongoing trade tensions and stagflation fears pushed the price of Bitcoin, the world’s most popular cryptocurrency, to drop 20% in the first three months this year, with further weakness expected in the second quarter, say analysts.
The decline comes amid slowing economic growth and interest rate cuts by the US Federal Reserve that are proceeding more gradually than markets anticipated, said Woramet Chansen, an investment adviser at Merkle Capital, Thailand’s first digital asset fund manager.
Digital assets were highly volatile and posted a significant decline in March, led by Bitcoin, which bottomed out at US$76,600, the lowest level in four months.
The altcoin market also fell, with Ethereum, the second-largest cryptocurrency, plunging 55% from a recent high, marking a 16-month low. This sharp correction reflects rising investor concerns over risk assets, he said.
Factors contributing to this decline include the Fed’s hint that rate cuts may come more slowly than expected, and heightened recognition of potential stagflation, characterised by stagnant growth and elevated inflation, said Mr Woramet.
These factors continue to weigh on risk assets broadly, he said.
Looking ahead, Merkle Capital anticipates the market to remain under pressure in the second quarter. However, it may mark a potential bottom and pave the way for mid-term growth opportunities, said Mr Woramet.
The minutes from the Fed’s Federal Open Market Committee meeting last month revealed the US economy is expected to grow more slowly than forecast, while inflation is running hotter than previously anticipated.
This macroeconomic backdrop increases the risk of stagflation, which further pressured risk assets in late March.
For the medium to long term, clearer signals on both the economic outlook and inflation could support a more stable investment environment, according to Merkle Capital.
Despite the corrections, Bitcoin and Ethereum could present attractive medium- to long-term investment opportunities. Bitcoin, in particular, continues to draw attention ahead of the upcoming halving, which could reshape market structure and affect liquidity, said Mr Woramet.
Merkle Capital said digital assets carry high risks and investors should carefully assess their risk tolerance and conduct thorough research before investing.
According to the Securities and Exchange Commission, Thailand’s total digital asset market value was 73.6 billion baht in March, marking a 4.45% decline from February.
The average daily trading volume dropped to 1.82 billion baht, down 20.2%, while the number of active trading accounts fell to 151,000, a 13.1% decrease month-on-month.
The global digital asset market was valued at $2.82 trillion as of March, representing a 5.2% decline. The average daily trading volume dropped to $18.4 billion, down 26.5%.
The market remained heavily concentrated, with Bitcoin accounting for 58.1%, Ethereum 7.8% and USDT 5.10% of the total market capitalisation.