Bitcoin plunged $5,000 in 24 hours as interest rates soared, marking the start of a turbulent April for cryptocurrencies and related stocks, especially mining stocks.
Representative cryptocurrency, BitcoinIt fell more than 6% on Tuesday to $65,150.00, a two-day loss of about 7%, according to Coin Metrics. The decline comes after the stock was trading around $70,000 on Monday morning. The decline was driven by data showing growth in the manufacturing sector for the first time since September 2022 and cooling investor bets on a rate cut in June. Bitcoin is currently down about 11% from its March 14 high.
Ethereum (Ether) also declined, falling 6% to $3,240.27.
At the same time, 10-year U.S. Treasury yields hit their highest this year, and the U.S. dollar, which is generally inversely linked to Bitcoin, hit its highest level in nearly five months.
The Bitcoin price drop was likely further exacerbated by a large number of Bitcoin holders, or “whales,” who transferred more than 4,000 Bitcoins to the Bitfinex exchange late Monday night. Data from CryptoQuant shows that exchanges have seen a surge in their reserves. This typically signals increased selling activity that coincides with a sharp decline in the price of Bitcoin late Monday night.
Stocks tied to Bitcoin performance also fell. Cryptocurrency exchange Coinbase fell 4%, and MicroStrategy, a software provider that primarily provides proxy trading for Bitcoin prices, fell nearly 7%. The largest mining companies, Marathon Digital and Riot Platforms, lost 7% and 6% respectively. Clean Sparkone of the best-performing miners this year, fell 6%.
April could be a tumultuous month for cryptocurrencies and related stocks, especially mining stocks. That’s because investors are keeping an eye on the Bitcoin halving event later this month, which will cut Bitcoin miners’ rewards and thus profits. . This incident may have a negative impact on miners’ performance, but historically Bitcoin has seen gains of over 300% in the following months.
Despite the recent recession, Bitcoin is still up 53% in 2024.
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