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Bitcoin Slips on Biden Drama, Mt. Gox Selloff Risk
(Bloomberg) — Bitcoin (Bloomberg) — Bitcoin (Bloomberg) fell for the third consecutive dailyBTC-USD exchange rate) has taken the digital asset close to levels last seen in February, amid challenges including U.S. political drama and the potential for creditor divestments of the failed Mt. Gox exchange.
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The largest cryptocurrency fell as much as 2.7% on Thursday before paring some of its decline and trading 2.4% lower at $58,092 by 9:20 a.m. in London. Smaller tokens such as Solana (SOL-USD) and meme favorite Dogecoin (DOGE-USD) also sank.
Investors in global markets are developing scenarios if 81-year-old President Joe Biden succumbs to calls to cancel his re-election bid in the United States. One possibility is that a stronger Democratic contender will emerge to make life harder for Republican Donald Trump, whose agenda favors the cryptocurrency industry.
“The likelihood of a stronger Democratic candidate replacing Biden who may not be pro-crypto is one factor,” said Richard Galvin, co-founder of hedge fund Digital Asset Capital Management. “A more important short-term reason for Bitcoin’s weakness is the Mt. Gox glut and government selloff.”
President Joe Biden speaks at a campaign rally in Raleigh, North Carolina. REUTERS/Elizabeth Frantz (Reuters/Reuters)
Gox administrators are returning a trove of bitcoin to creditors in phases. Traders are unsure how much of the $8 billion haul will be sold and are separately weighing the risk of U.S. and German governments disposing of the seized bitcoin.
Miners in trouble
Meanwhile, the energy-hungry computer operators who underpin the Bitcoin blockchain continue to absorb the financial blow of the so-called April halving, which has dampened the new tokens they receive for the work they do. One response from these Bitcoin miners is to sell off some of their token inventory.
“Bitcoin continues to struggle with selling pressure from miners,” wrote Noelle Acheson, author of the Crypto Is Macro Now newsletter.
Sentiment can shift quickly in the crypto space, for example if weaker U.S. economic data spurs bets on a more dovish Federal Reserve monetary policy. Pending approvals for U.S. ETFs investing in the No. 2 token Ether could also lift sentiment.
The interpretation of U.S. political developments could also change. Bitwise Asset Management Inc. Chief Investment Officer Matt Hougan argued that the potential turnover at the top of the Democratic ticket “is more likely than not settling into a better place for cryptocurrencies.” He said Washington’s attitude toward digital assets has changed for the better over the past year.
The story continues
Speculators are now poring over Bitcoin charts to see if closely watched technical levels hold or decline. The cryptocurrency just closed below an approximation of its six-month moving average price. Such breaches portend further losses, if history is any guide, data compiled by Bloomberg show.
—Featuring Mark Cudmore and Sidhartha Shukla.
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