Bitcoin Under Pressure from Risk Aversion, Saddled with Heftiest Weekly Loss Since FTX Collapse

The original cryptocurrency traded near US$58,500 after losing 13.1 per cent in the seven days to Sunday (Aug 4), the most since the period of FTX’s bankruptcy.

Bitcoin faced heavy selling pressure last week as part of a broader risk aversion move in global markets that saddled the largest digital asset with its heftiest weekly loss since the spectacular collapse of the FTX exchange in 2022.

The original cryptocurrency traded near US$58,500 on Monday (Aug 5) morning in Asia, having lost about 13.1 per cent in the seven days to Sunday (Aug 4). This marked the steepest weekly decline since the period of FTX’s bankruptcy, according to price data.

Smaller tokens such as Ether and meme-crowd favourite Dogecoin also nursed losses last week. Ether fell around 11.5 per cent to US$41,200, while Dogecoin dropped about 7.2 per cent to US$0.31.

US equity futures sank early Monday, reflecting concerns among traders about the growth outlook in the world’s biggest economy and weakness in giant technology stocks amid questions over whether artificial intelligence hype has gone too far.

Geopolitical tension is also rising in the Middle East, adding to investor skittishness. The US is said to be preparing to intercept Iranian oil shipments bound for Venezuela.

Bitcoin exchange-traded funds in the US suffered their largest outflows in about three months on Aug 2, according to data compiled by State Street Global Markets. The digital asset has also tumbled through its 200-day moving average price.

“The technical pattern opens the way for a deeper pullback towards 472 of the Fibonacci extension at US$54,000, which should now act as support,” said Tony Sycamore, market analyst at IG Australia, in a note on Monday.

Bitcoin has been buffeted by a range of factors since hitting a record high of US$73,798 in March, ahead of the US presidential election campaign.

Among them are shifting political fortunes in the US as pro-crypto Republican Donald Trump and Democratic opponent Vice-President Kamala Harris – who has yet to detail a digital-asset policy stance – lock horns in the presidential race.

Also hanging over the market are possible sales of Bitcoin seized by governments and the risk of a supply overhang from tokens returned to creditors through bankruptcy proceedings, as in the case of failed crypto hedge fund Three Arrows Capital.

Bond traders have amplified bets on US interest-rate cuts beginning in September to support economic expansion, after data showed manufacturing activity contracting for the first time in nearly three years.

The recent upheaval in traditional markets “increases the likelihood of less restrictive monetary policy coming sooner rather than later – a good thing for crypto”, argued Sean Farrell, head of digital-asset strategy at Fundstrat Global Advisors, in a note on Friday.

Bitcoin’s year-to-date advance has moderated to approximately 34 per cent, compared with a 19 per cent climb in gold and a 9 per cent jump in a gauge of global stocks.

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