Bitcoin
Bitcoin Falls on Biden Drama, Mt. Gox Sell-Off Risk
(Bloomberg) — A third consecutive daily drop in Bitcoin (BTC-USD) has taken the digital asset close to levels last seen in February amid challenges including U.S. political drama and the potential for divestitures by creditors of bankrupt exchange Mt. Gox.
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The largest cryptocurrency fell as much as 2.7% on Thursday before paring some of the decline to trade 2.4% lower at $58,092 as of 9:20 a.m. in London. Smaller tokens such as Solana (SOL-USD) and the meme crowd favorite Dogecoin (DOGE-USD) also sank.
Investors in global markets are mulling over scenarios if 81-year-old President Joe Biden succumbs to calls to abandon his U.S. re-election bid. One possibility is that a stronger Democratic candidate could 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 a factor,” said Richard Galvin, co-founder of hedge fund Digital Asset Capital Management. “A bigger reason in the near term for Bitcoin’s weakness is the Mt. Gox overhang and the government selloff.”
President Joe Biden speaks during a campaign rally in Raleigh, North Carolina. REUTERS/Elizabeth Frantz (Reuters/Reuters)
Mt. Gox administrators are returning a stash of Bitcoin to creditors in stages. Traders are uncertain how much of the $8 billion loot will end up being sold, and separately weighing the risk of disposals by the U.S. and German governments of seized Bitcoin.
Miners in trouble
Meanwhile, the operators of the energy-hungry computers that underpin the Bitcoin blockchain continue to absorb the financial impact of April’s so-called halving, which restricted the new tokens they receive for their work. 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 could shift quickly in crypto, for example, if weaker U.S. economic data spurs bets on looser monetary policy from the Federal Reserve. Pending approvals for U.S. exchange-traded funds investing in the No. 2 token Ether could also boost sentiment.
The interpretation of U.S. political developments could also change. Bitwise Asset Management Inc. chief investment officer Matt Hougan argued that potential turnover at the top of the Democratic ticket is “more likely than not to settle into a better place for crypto.” He said Washington’s attitude toward digital assets has changed for the better over the past year.
The story continues
Speculators are now scouring Bitcoin’s charts to see whether closely watched technical levels hold or weaken. The cryptocurrency just closed below an approximation of its six-month moving average price. Such breaches portend more losses if history is any guide, data compiled by Bloomberg shows.
—With assistance from Mark Cudmore and Sidhartha Shukla.
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