Bitcoin fell below $70,000 on Friday, extending a two-day slump to nearly 9% amid rising inflation and interest rate worries. Rich Rosenblum of GSR said volatility and dollar strength forced investors to unwind positions. Meanwhile, US-listed spot Bitcoin ETFs recorded over $2.5 billion in net outflows since October 30.
Bitcoin fell below $70,000 on Friday for the first time since August, extending its two-day decline to nearly 9% as persistent inflation and expectations of higher US interest rates triggered another round of selling across cryptocurrencies.
The world's largest cryptocurrency dropped as much as 5.4% to $67,628, its weakest level since August 19, as per Bloomberg. It had already lost 3.8% during Thursday's session before recovering some ground to trade near $69,200 in early New York trading.
The sell-off also exposed the risks of leveraged positioning. Around $1.5 billion in bullish cryptocurrency bets were liquidated over 24 hours, according to CoinGlass data. These forced closures added to downward pressure as prices breached key levels.
Inflation and Fed expectations weigh on crypto
Fresh US inflation figures have strengthened concerns that the Federal Reserve may need to keep monetary policy restrictive or raise interest rates again. Core consumer prices, excluding food and energy, increased 0.3% month-on-month in October, exceeding estimates for the third consecutive month. Headline inflation rose 0.4%, reflecting higher costs across essential categories.
Elevated crude oil prices have further complicated the inflation outlook. Higher borrowing costs typically reduce the appeal of speculative assets such as Bitcoin, as investors reassess their exposure to riskier investments.
Rich Rosenblum, co-founder of crypto market maker GSR, said volatility in the artificial intelligence trade and continued dollar strength had forced investors to unwind bullish Bitcoin positions. He also pointed to inflation data and Nvidia's leadership turmoil as additional pressures on risk assets.
Institutional demand weakens
Selling has not been limited to retail traders. US-listed spot Bitcoin exchange-traded funds have recorded more than $2.5 billion in net outflows since October 30, indicating that institutional demand has also weakened.
Political developments are adding another layer of uncertainty. Democrats' gains in the US midterm elections have raised expectations of tighter scrutiny of the cryptocurrency industry.
With leveraged positions being unwound and ETF investors pulling money out, Bitcoin faces pressure from both speculative and institutional investors.