Bitcoin dipped below $90,000 for the first price in seven months on Tuesday, signaling a decline in investor risk appetite throughout financial markets.
The risk-sensitive cryptocurrency has lost all this year’s gains and is roughly 30% below October’s peak above $126,000. After falling to $89,286.75, it fell 1.1% to $92,891.
Crypto was falling due to market players’ uncertainties about future U.S. interest rate cuts and risk aversion in broader markets, which had wobbled following a strong rally.
“Confidence can fade quickly.”
“Listed companies and institutions exiting their positions after piling in during the rally fuels the cascading selloff, increasing market contagion risks,” said Hong Kong Web3 Association co-chair Joshua Chu.
“When support thins and macro uncertainty rises, confidence can erode with remarkable speed.”
According to Joseph Edwards at Enigma Securities, crypto speculators who hoped for U.S. regulation have pulled back, triggering persistent outflows from ETFs and similar instruments in recent weeks.
“The sell pressure here isn’t extraordinary, but it’s coming at a relative weak point on the buy side… a lot of retail buyers were stung during the flash crash last month,” alluding to the October crisis that liquidated $19 billion in leveraged bets.
Strategy (MSTR.O), Riot Platforms (RIOT.O), Mara Holdings (MARA.O), and Coinbase (COIN.O) have all fallen with the soured mood.
Since tiny companies in unrelated sectors have announced ambitions to buy and hold cryptocurrencies on their balance sheets, public crypto treasury companies have boomed this year.
But Standard Chartered Bank estimates that a drop below $90,000 per bitcoin could leave half of these corporations’ bitcoin holdings “underwater”—meaning worth less than they were paid for.
Standard Chartered reported that listed businesses control 4% of bitcoin and 3.1% of ether.
Strategy, the largest bitcoin holder, has been buying. On Monday, founder Michael Saylor stated the company bought 8,178 bitcoin.
Saylor told X that Strategy had 649,870 tokens at $74,433 per bitcoin on Sunday.
Ether has been under pressure for months and lost roughly 40% of its value from August’s $4,955 peak.