Bitcoin Holds Below $70,000 as Risk-Off Mood Pressures Crypto — Update

By Fabiana Negrin OchoaCryptocurrencies slumped on Friday as expectations of higher rates and the technology stock selloff sapped risk appetite.Bitcoin fell below $70,000 for the first time since August, sinking 3% and putting the crypto benchmark on track for its sixth weekly loss, LSEG data show. It is now down over 21% from the highs reached in late September.Ethereum breached key levels as well, crashing below $2,000 to trade at three-month lows.Bitcoin was last down 3% at $69,342, while Ethereum shed 3.2% to $1,951.The selloff pours cold water on hopes that the crypto rebound that had begun during the summer is taking hold.The backdrop for a crypto turnaround looks bleak: Stubbornly high U.S. inflation has markets pricing in more interest-rate hikes by the Federal Reserve, dimming the appeal of nonyielding assets.The hawkish pivot in market pricing has also fueled strength in the U.S. dollar, creating another headwind for bitcoin demand.A continued downturn in tech and artificial-intelligence stocks adds pressure too as traders liquidate positions to cover losses elsewhere."This crypto crash was kicked off by the Nvidia scandal and the broader risk-off sentiment in tech stocks that's following as a result. But what started as downward price pressure has now snowballed," said Nic Puckrin, cross-asset analyst and founder of Coin Bureau."ETF outflows and other crypto-specific pressures, namely the fact that MSCI has confirmed it is removing Strategy from its indices, are also weighing," Puckrin said.Crypto exchange-traded funds have seen outflows of around $1.57 billion over the last five trading days, according to crypto data platform CoinGlass.The next potential stressor lies in U.S. economic data.A hotter producer-price index reading could reinforce expectations of tighter monetary policy, extending ETF outflows, said Ranim Turfa, head of research and market analysis MENA at Tickmill. Softer numbers could help bitcoin stabilize, Turfa said.Write to Fabiana Negrin Ochoa at [email protected]