Bitcoin fell for a second day to start the new month and quarter amid rising Treasury yields and strength in the U.S. dollar.
The flagship cryptocurrency fell more than 4.76% on Tuesday to $66,134.00, bringing its two-day loss to 7%, according to Coin Metrics. At one point it fell as low as $64,572.00.
On Monday morning, it was trading at about $70,000 before data came out showing growth in the manufacturing sector for the first time since September 2022 and investor bets on June rate cuts began to cool. Bitcoin is now off its all-time high, reached on March 14, by about 11%.
Ether went down with it, losing 5.6% to trade at $3,240.27.
Meanwhile, the 10-year U.S. Treasury yield hit its highest level of the year and the dollar, which has an inverse relationship with bitcoin, hit a five-month high.
“Bitcoin doesn’t need much excuse to go through a period of correction after such an explosive performance in Q1,” said Joel Kruger, market strategist at LMAX Group. “Having said that, U.S. economic data has been stronger of late, all while inflation continues to be a concern. This has resulted in a repricing of Fed expectations, translating to broad-based U.S. dollar demand on the more attractive U.S. dollar yield differentials.”
Bitcoin’s move may have been exacerbated by a large bitcoin holder, or “whale,” who transferred more than 4,000 bitcoin to the Bitfinex exchange late Monday night. Data from CryptoQuant shows a spike in that exchange’s reserves — which typically signals a boost in selling activity — that coincides with the sudden drop in bitcoin price late Monday night.
Stocks tied to the performance of bitcoin were dragged down but traded off their lows to end the day. Crypto exchange Coinbase fell 2%, while software provider MicroStrategy, which largely trades as a proxy for the price of bitcoin, lost 3%. The largest mining stocks, Marathon Digital and Riot Platforms, lost 8% and 7%, respectively. CleanSpark, one of the best-performing miners this year, slid 9%.
April could be tumultuous for crypto and related stocks, particularly mining stocks. Investors are looking toward the bitcoin halving, which will slash the reward, and therefore revenue, of bitcoin miners, in the second half of the month. The event could hurt the performance of miners but historically has set bitcoin up for rallies of 300% or more in the months that follow.
Bitcoin is still up 55% for 2024.
