A sell-off has hit the crypto market, with Bitcoin falling below $95,000 at one point on Tuesday. The move comes as optimism sparked by President-elect Donald Trump’s support for the sector begins to cool.
Speculators had poured into crypto after the US election, fueled by Trump’s pledge to create a supportive regulatory backdrop and his backing for a national Bitcoin reserve. However, the notorious volatility of digital assets means investors are prone to quick exits.
The sell-off is part of a broader trend of “deleveraging across the crypto ecosystem,” according to Sean Farrell, head of digital-asset strategy at Fundstrat Global Advisors LLC. This may be due to caution ahead of US inflation data that could impact Federal Reserve interest-rate cuts.
Recent trading data shows $1.6 billion in bullish crypto positions were liquidated in the past 24 hours, indicating a sign of leveraged bets unraveling. Despite this, some investors remain optimistic about the sector’s future prospects.
Trump has picked a digital-asset proponent to head the US securities regulator and named an AI and crypto czar for the White House. This move is seen as a significant step towards relaxing regulations and promoting mainstream acceptance of crypto. However, critics warn that wider adoption brings a range of risks.
Investors have poured $10 billion into US spot-Bitcoin exchange-traded funds since Trump’s election, with Microstrategy Inc. announcing another $2.1 billion purchase of Bitcoin on Monday. Traders view these announcements as a potential boost to the market.
Source: https://finance.yahoo.com/news/bitcoin-wavers-smaller-tokens-sink-233925961.html