What looked like prime time for crypto assets on softening inflation data has turned into an ugly week with bitcoin (BTC) tumbling to its weakest price in four weeks on Friday.
BTC tumbled more than 2% in an hour to $65,100 during the U.S. trading session from around the $67,000 area. The leading crypto was down 7.5% over the past seven days.
Smaller cryptocurrencies saw even steeper declines, with the broad-market benchmark CoinDesk 20 Index shedding almost 12% week-over-week. Ether (ETH) dropped to $3,400, losing over 10% during this period, while native tokens of rival layer-1 networks Solana (SOL), Avalanche (AVAX), Cardano (ADA) and Near (NEAR) sported 15%-20% declines, CoinGecko data shows.
The swift tumble liquidated nearly $180 million of leveraged derivatives trading positions across all crypto assets over the past 24 hours, most of them longs betting on higher prices, CoinGlass data shows. This week's shake-out saw a total of over $870 million in liquidations, flushing excess leverage from markets.
Analysts and many market participants just a few days ago anticipated an imminent breakout for bitcoin to new record highs, supported by a slower pace of inflation and softer economic data, but attempts for rallies were quickly sold off, leaving BTC stuck in its sideways range.
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The Federal Reserve this Wednesday projected only one rate cut for this year, less than the central bank's previous forecast, dashing investor hope for looser monetary policy coming this summer. Political uncertainty in Europe with a snap election being called in France also pushed the U.S. dollar index (DXY) higher against other major currencies to its strongest level in more than a month, putting pressure on bitcoin.
Bitcoin also struggled with increased selling from miners and profit-taking from long-time holders near the $70,000 area, 10X Research noted, weighing on the broader crypto market.