Bitcoin plunges as ‘forced deleveraging’ acceleratescontent framecontent framecontent frame

Bitcoin briefly tumbled below $US63,000 as negative momentum deepened across cryptocurrencies, driven by vanishing marginal demand and this week’s volatility in tech equities along with precious metals. The token was 12.4 per cent lower to $US64,099 at 4.02pm in New York; it earlier fell to $US62,413. The rout has erased nearly half of bitcoin’s value since it reached a record four months ago and has spread to other tokens, related ETFs and companies like Strategy that hold vast sums of coins. The downturn has marked an abrupt retreat from bitcoin’s meteoric rise through much of last year, when the return of the crypto-friendly Republicans to the White House sent investors piling into such tokens and the Wall Street vehicles that have sprouted up around them. The market started cracking this month as rising geopolitical tensions sent tremors across global financial markets and curbed risk taking. That sparked bitcoin’s precipitous decline from mid-January and set off a self-reinforcing cycle of selling as funds liquidated assets to meet redemptions and unwind leveraged bets. Trading volumes remain weak, futures markets are in a “forced deleveraging phase”, and inflows have dried up – creating a demand vacuum where “sustained sell pressure” is forcing investors to exit at a loss, according to analysts at crypto research firm Glassnode. Over $US1 billion ($1.4 billion) in crypto bets have been liquidated in futures markets over the last 24 hours. The latest drop comes as digital assets lose their grip on nearly every narrative that once underpinned demand. Bitcoin is no longer acting as a hedge, failing to rise alongside gold during periods of geopolitical stress. Inflows into US spot-bitcoin ETFs have reversed as prices have plummeted – and about $US2 billion has come out of bitcoin ETFs over the past month alone. Meanwhile, exchanges like Coinbase Global, Gemini and Bullish, have also been hit hard. Trading volumes are plunging, dragging share prices down by as much as 60 per cent over the past three months.