The price of bitcoin edged lower on Thursday in sync with the Nasdaq Composite and S&P 500 indexes. The crypto shed over 7% to trade as low as $50,305 as uncertainty mounted over dwindling BTC demand in the face of a recovering US economy.
Renewed consumer spending in the US has led to the creation of 379,000 jobs this past month. Widespread vaccinations have meant that the country can ease business restrictions, leading to the lowest jobless claims since the start of the Covid-19 pandemic.
According to Justin d’Anethan, the head of exchange sales at the Nasdaq-listed crypto company Diginex, the stock market’s recent selloff is likely spreading into crypto.
Stocks are likely slipping as portfolio managers move their capital out of equities to bonds due to the Federal Reserve’s prospect of maintaining infinite bond-buying programs. BTC and other crypto assets that are also considered risky assets like stocks are also seeing lower retail-investor interest.
At the time of writing, the BTCUSD exchange rate is down 7% to trade at $51,581. Despite the pullback towards the $50K threshold, BTC is still up approximately 672% over the past twelve months.
BTCUSD Chart by TradingView
The Options Market Triggers BTC Price Volatility
The flagship crypto is well off recent highs after tumbling by almost 17% from its record price of $61,742 set earlier this month.
The options market has contributed to the drop in BTC prices alongside diminishing retail interest as investors park their capital in less risky alternatives.
As earlier reported by The Daily Chain, just under $6 billion in bitcoin options face expiry on Friday. The unwinding of these contracts has prompted some traders to try and push BTC prices lower to profit from their bets, thus adding to market volatility.
According to Ari Paul, the founder of BlockTower Capital, bitcoin could correct lower towards $40K since too many people are betting on an upside continuation.
“Too many people positioned for immediate upside continuation. IMO – everyone frontrunning institutions, but institutions coming in slowly,” Paul tweeted on Wednesday.
He, however, added that such a slip in BTC prices would present an opportunity for investors to buy the dip.
Ether Price Dives Below $1,600
The world’s second-largest crypto also fell on Thursday by over 6% to trade below a critical support base.
The sharp decline came as bulls attempted to gain strength above $1,750, but it failed. The bears took control and pushed prices below the $1,600 support level. ETHUSD has recovered slightly and is now changing hands at $1,604.
ETHUSD Chart By TradingView