Bitcoin prices rose above $70,000 on Friday morning, erasing some of the losses seen over the past two days. But that momentum quickly faded as Asian tech stocks fell.
summary
- Bitcoin has rebounded above $70,000 after falling 8%, supported by buy-in despite rising geopolitical tensions and inflation concerns.
- Risk sentiment weakened as tech stocks in Asia and the U.S. fell, reflecting pressure on risk assets on the back of solid inflation data and a hawkish Fed outlook.
- The U.S. Spot Bitcoin ETF recorded outflows of more than $250 million in two days, suggesting a lull in institutional demand after a week of heavy inflows.
Bitcoin ($BTC) Prices rallied above $70,000, a psychological mark that many analysts say serves as an important anchor for investor confidence. The bellwether was trading at $70,749 at the time of writing, giving it a market capitalization of $1.41 trillion.
$BTC/$USDT Daily price chart. “>
$BTC/$USDT Daily price chart — March 20th | Source: crypto.news
Bitcoin prices rose as bulls bought a dip below $70,000 after news of an Israeli attack on Iranian energy sources broke out, sparking fears of rampant global inflation as oil prices rose to record highs.
At the same time, risk sentiment deteriorated following a series of weak economic indicators. This coincided with the better-than-expected PPI data and Fed Chairman Jerome Powell’s indication that the central bank intends to keep interest rates on hold as long as inflation remains high.
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Although Bitcoin has managed to regain the psychological support level of $70,000, several hurdles may stand in the way of further gains.
First, Asian tech stocks are down so far on Friday morning. In particular, Japan’s Nikkei Stock Average fell by 1,866 points (3.38%), and China’s Shanghai Composite Stock Price Index fell by 0.50%. US tech stocks showed similar weakness yesterday, with the Dow Jones Industrial Average closing 0.44% lower, and the S&P 500 and Nasdaq 100 each down more than 0.25%. The only exception was the Russell 2000 index, which rose 0.65%.
Cryptocurrencies often mirror trends followed by these tech stocks, as they share a high sensitivity to liquidity and interest rate expectations.
Second, investors appear to be shifting towards gold, which soared more than 2% today to over $4,700, reinforcing its position as a safe-haven asset amid widespread macroeconomic and geopolitical uncertainty. There was also a lot of interest in silver, which rose more than 3% to $74.
Third, institutional demand for Bitcoin seems to have taken a breather. The US Spot Bitcoin ETF recorded net outflows over the past two days, with more than $250 million outflows, according to SoSoValue data.
While the outflows are relatively small considering the seven consecutive days of inflows of $1.16 billion immediately preceding this change, investors could take this as a sign that the current bull run is temporarily drying up.
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Disclosure: This article does not represent investment advice. The content and materials published on this page are for educational purposes only.
