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Bitcoin Slips in Another Sign That Retail Trader Mania Is Fading
(Bloomberg) — Bitcoin fell amid a wider retreat in assets that had earlier ridden a wave of stimulus-infused optimism among retail traders.The largest cryptocurrency fell as much as 6.7% to $50,440, as of 11:55 a.m. in New York. The token, down for the fifth straight day, is mired in its longest losing streak since December. The wider Bloomberg Galaxy Crypto Index is also struggling.Speculation is growing that the latest stimulus checks in the U.S. will be spent in the real economy rather than markets as vaccinations help return life to something closer to normal. The number of call options traded in the U.S. has slipped from the records earlier this year and high-profile investments like GameStop Corp. and the ARK Innovation ETF are well off their highs.A general Bitcoin downtrend is being “exacerbated by the move to value in general across asset classes” and away from areas like technology, said Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore. The upcoming expiry of derivative contracts is adding to the volatility, he said.The world’s largest digital asset on Thursday briefly fell below its average price over the past 50 days, which has been a key support level so far this year, according to Miller Tabak + Co.’s Matt Maley. A “lower-low below that level would scare a lot of momentum players,” said the firm’s chief market strategist.Bitcoin is about $10,000 below a record of $61,742 set earlier in March, but remains 700% higher over the past year. The coin spiked briefly on Wednesday after a series of tweets from Tesla’s Elon Musk announcing the automaker will accept the digital asset as payment. Still, it’s down roughly 12% since Friday.“Shorter-term, what happened yesterday, and following through today, means the start of a new series of lower highs and lower lows, and that’s categorized as a downtrend,” Julius de Kempenaer, senior analyst at StockCharts.com, said in a phone interview. “It means that we are now in a downtrend on the daily chart and it also means that the upside is now limited.”The token remains mainly a vehicle for speculation and is unlikely to displace alternative stores of value, according to Blythe Masters, a former JPMorgan Chase & Co. executive who is now chief executive of Motive Capital. The Bank of International Settlement’s Benoit Coeure said the coin’s volatility makes it impossible to act as a currency.Others argue institutional adoption of Bitcoin is expanding as part of efforts to diversify portfolios and hedge risks like faster inflation.“The color and information we see from the street is largely from the institutional part of the market, and nothing has really changed in their view on the impact of stimulus on longer term inflation and the role of digital assets as a hedge to that,” said Matt Long, head of distribution and prime brokerage at digital-asset platform OSL in Hong Kong.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.