Bitcoin hit its lowest level since November last week, dropping 25 percent from its high only six weeks ago, as investors were spooked by a $1.5 billion (£1.2bn) crypto theft, uncertainty around trade conflicts and concerns about US crypto policy.
In mid-January Bitcoin neared $110,000 on optimism that the incoming Trump administration would implement crypto-friendly policies, but positive sentiment has evaporated since then as the US president turned to tariff threats that spurred widespread concerns about growth and inflation.
Other than appointing crypto-friendly officials to key regulatory positions, Trump has taken few concrete measures to implement promised plans such as more permissive regulations or a national cryptocurrency strategic reserve.
Crypto heist
Meanwhile a $1.5bn theft from Dubai-headquartered Bybit, the world’s second-largest cryptocurrency exchange after Binance, further dented confidence.
The hack, blamed on North Korea by US officials and tech analysts, is thought to be the biggest-ever crypto heist.
Bitcoin’s price fell 16 percent last week, the biggest weekly drop since the collapse of exchange FTX in November 2022.
US-listed Bitcoin exchange-traded funds (ETFs) saw outflows of $2.27bn during the same period.
Bank of America analysts on Friday noted that the average daily price of Bitcoin had struggled to break above $97,000 since November and said this was evidence of the “bro bubble popping”.
The comment referred to the “crypto bro” influencers that have commonly whipped up hype around cryptocurrenciees in the past few years.
In times of economic uncertainty, investors typically sell volatile assets such as cryptocurrencies or tech stocks, and buy ones that are more stable.
Economic uncertainty
The tech-heavy Nasdaq is also at its lowest level since November, while Nvidia shares have fallen since it reported strong results last Wednesday, over concerns of slight profit-margin weakness and questions over whether it can sustain its rapid rate of growth.
Bybit said last week it had recovered its reserves following the theft.
The hack last month sparked liquidity fears and panic selling, but Bybit insisted at the time that it was “solvent” and that client funds were safe.
“Bybit is solvent even if this hack loss is not recovered, all of clients assets are 1 to 1 backed, we can cover the loss,” Ben Zhou, chief executive of the Dubai-based company said at the time in a social media post.
