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Bitcoin (BTC) and other cryptocurrencies have seen precipitous declines in morning trading today. Even though BTC is still up more than 50% year-to-date, the world’s oldest cryptocurrency is down more than 6% over the past 24 hours.
This means bitcoin—which soared in recent weeks to new all-time highs above $73,000—is back down to $65,000. That is a psychological hurdle that it spent nearly the entire “crypto winter” of 2022 and 2023 trying to clear.
Ethereum (ETH), the world’s leading altcoin, is also down more than 7% over the past 24 hours, bringing ETH’s price back down to $3,200. This, too, was an impediment that Ethereum spent almost two years trying to surmount following the onset of crypto winter in April 2022.
Bitcoin’s price decline has affected almost the entire cryptosphere. Other leading altcoins are down as well. Solana (SOL) is down 9%. BNB Coin (BNB) is down 6%. XRP (XRP) is down 4%. Cardano (ADA) is down more than 6%, and Avalanche (AVAX) is down 10%.
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Why Is Bitcoin Down Today?
Bitcoin’s price dip today appears to have been set off by strong U.S. factory data that sent the U.S. dollar index above 105.00 for the first time in almost five months.
The U.S. dollar index measures the strength of the U.S. dollar against other major global currencies, such as the Japanese yen (JPY), British pound (GBP), the euro (EUR) and more. This morning’s climb over 105.00 shows the dollar is strengthening with respect to other global currencies.
Yesterday, the Institute for Supply Management released the March purchasing managers’ index, or PMI, which came in at 50.3%, up 2.5 percentage points from February’s reading of 47.8%.
Stronger U.S. factory data could lead to stronger U.S. exports, which would help the dollar’s strength against other global currencies. A stronger dollar could hinder bitcoin’s recent strong performance.
Bitcoin Has Been in a Bull Market Since November
Bitcoin has been on a major bull run since November of last year. It climbed from $34,000 at the end of October to more than $73,000 in March.
After the U.S. Securities and Exchange Commission approved 11 new spot bitcoin exchange-traded funds on January 10, bitcoin uptrended, gaining more than 50% this year alone.
ETFs, like mutual funds, are baskets of securities that investors can trade as a single investment. However, unlike mutual funds, ETFs are traded directly on stock exchanges throughout the market day.
Cryptocurrencies themselves trade 24/7 because, unlike stocks and commodities, the crypto market is not a regulated exchange. It occurs across a decentralized network of computers.
Bitcoin ETFs—whether spot or focused on futures—only trade during market hours.
A spot ETF differs from a futures ETF in that a spot ETF tracks the current price of the underlying asset, while a futures ETF tracks potential future prices of the underlying asset.
Futures ETFs deal in the trading of futures, which are complex derivatives products best suited for direct trading only by experienced investors.
Is Cryptocurrency a Safe Investment?
Cryptocurrency markets saw a tremendous resurgence in 2023, with Bitcoin closing the year up 156%. In many investors’ opinions, this rebound put an end to 2022’s crypto winter, which was exemplified by the rapid collapse of crypto exchange FTX in November 2022.
As a result of FTX’s collapse and other circ*mstances, U.S. regulators cracked down on exchanges and other companies trading in and creating cryptocurrencies.
The SEC chair, Gary Gensler, has said in the past that his agency believes most cryptocurrencies are in fact securities and hence fall under the purview of a plethora of already-existing rules and legal precedents.
This claim has been further asserted in filings by the SEC against a handful of crypto exchanges and companies—including Binance and Coinbase—alleging that those entities were dealing in the unlicensed sale and transfer of securities.
However, Gensler and the SEC have also stated that bitcoin itself is probably a commodity—not a security—and should be regulated by the CFTC, not the SEC.
With today’s price decline, bitcoin’s current price is around $65,000, which is more than 12% below its new all-time high of $73,750, set last month.
