Bitcoin is having its worst week since the fall of FTX

Bitcoin (BTC-USD) is having its worst week since Sam Bankman Fried’s FTX cryptocurrency exchange crashed in November 2022.

The world’s largest cryptocurrency fell 14.85% in the week ending Saturday, according to Yahoo Finance data, before falling another 7% in the past 24 hours following a broader correction across markets.

The price of the digital asset also briefly dropped below $50,000, hitting its lowest level since February. It has lost more than $13,000 of its value in the last 7 days.

Ether (ETH-USD), the second-largest cryptocurrency, is suffering even heavier losses, falling more than 15% in the same 24-hour period, its biggest single-day drop since the end of 2021.

The crypto sell-off comes after a series of events that have given investors fresh hope that a bull market in digital assets may be just beginning and suggest that the sector has recovered from the severe crash of 2022 that took down some of the biggest players, including FTX.

In fact, just two weeks ago Bitcoin was very close to its all-time high of $74,000 set in March when former President Donald Trump was set to speak at a Bitcoin conference in Nashville.

The Republican presidential candidate’s endorsement has many in the industry excited to expect a friendlier regulatory approach from Washington, D.C. in 2025 and beyond.

Investors were also excited by the Securities and Exchange Commission’s approval for big money managers to launch new exchange-traded funds holding ether, the latest example of how Wall Street is embracing cryptocurrencies.

These ETFs could make Ether a potential staple in 401(k)s, IRAs, and retirement plans, helping to bring more widespread acceptance to the digital asset.

Republican presidential candidate former President Donald Trump speaks at the Bitcoin 2024 Conference in Nashville on July 27. (AP Photo/Mark Humphrey) (ASSOCIATED PRESS)

Many of the same money managers who received SEC approval already had ETFs that invested directly in Bitcoin.

But these new products could push prices down in the near term, according to one industry observer.

According to Noelle Acheson, author of the Crypto Is Macro newsletter, this could lead to a larger “pile of sell orders” that could “further destabilize the market.”

Last week, digital asset ETFs and other investment products saw their first weekly outflows in a month, totaling $528 million, with bitcoin accounting for the lion’s share of the pressure, according to crypto asset manager CoinShares.

Other observers urged calm on Monday amid market chaos. Bitcoin is still up 29% since the start of the year, while ether is 6% higher.

“We were not surprised by Bitcoin’s immediate response,” Gautam Chhugani, a senior analyst who tracks digital assets for Bernstein, wrote in a note on Monday. He noted that “we saw a similar Bitcoin response” at the start of the COVID-19 pandemic in March 2020.

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However, “we don’t see any increasing negativity for crypto here. Bitcoin’s institutional adoption trends – ETF inflows and brokerage/bank approvals – are on track,” and “US politics remain a significant catalyst for crypto markets in the near term.”

Leverage in the cryptocurrency market exaggerates the recent decline.

According to data provider Coinglass, approximately 307,000 investors saw over $1.23 billion worth of crypto derivatives bets liquidated in the past day.

More than a quarter of those losses were in Bitcoin, with the biggest loss coming from a $27 million long Bitcoin position on China-based cryptocurrency exchange Huobi.

Cryptocurrency-related stocks also took a hit.

Shares of US-based exchange Coinbase Global (COIN) fell 6% in trading on Monday, while shares of MicroStrategy (MSTR), the largest institutional holder of bitcoin, fell 9%.

Bitcoin mining stocks Marathon Digital (MARA) and Riot Platforms (RIOT) are down 5% and 4% respectively.

David Hollerith is a senior reporter at Yahoo Finance, covering banking, cryptocurrency, and other areas of finance.

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