Bitcoin fell below $70,000. In Nov. 12 trading it dipped below $70,000 at one point, a decline of nearly 20% from the roughly $86,000 level reached about a month ago. Having clearly broken below its 200-day moving average (around $73,000), a key technical threshold, buyers have stepped back and there is no visible support on the downside.
Bitcoin had formed a descending channel since peaking at $87,000. Around $75,000, where the 50% retracement of the August rally coincided with September lows, there were moments when the decline stalled, but the situation changed after reports emerged early in the week of an extramarital affair allegation involving Jensen Huang, CEO of semiconductor giant NVIDIA. As speculation over the CEO's resignation intensified, selling spilled over into Bitcoin, which is highly correlated with tech stocks. Strong US consumer price index (CPI) data and rising US long-term yields also weighed on prices, and after a battle around the 200-day line in the $73,000 range, Bitcoin clearly broke below that line during overseas hours.
There are multiple factors pushing the market lower. First is the management turmoil at NVIDIA. After the New York Times reported another extramarital affair involving CEO Huang, the view that his resignation is unavoidable spread, and the company's shares plunged in after-hours trading. NVIDIA stock opened 14% lower from the previous day's close; when it rebounded, Bitcoin also recovered to the $72,000 range, but the bounce did not last. President Trump's social media post saying no deal with Iran is needed pushed crude oil prices higher, and yields surged in the US bond market, which reopened after the Veterans Day holiday, also prompting selling of risk assets.
Second is supply-demand pressure. While news such as the roughly $6.3 billion hacking incident disclosed by crypto exchange Binance on Oct. 30 and the US Justice Department's seizure of about $1.2 billion worth of assets had limited impact on the market, the problem highlighted is the scarcity of funds willing to buy even as prices fall. With selling from US exchange-traded funds (ETFs) continuing and key technical levels broken one after another, there is no presence of dip-buyers.
Third is the impact of the massive initial public offering (IPO) by artificial intelligence (AI) company Anthropic. The company's IPO has drawn six times the demand from institutional investors and is reported to be sized at up to $100 billion including the offering. About 20% is slated to be allocated to individual investors, and some asset sales may be occurring to secure purchase funds as the offering begins. There have been past instances when gold and Bitcoin were sold when SpaceX IPO speculation surfaced, and the relatively small Bitcoin market is susceptible to such fund flows.
In futures markets, $500 million worth of long positions were liquidated over the past 24 hours. While the scale of liquidations is viewed as within expectations, there has been no commensurate buying back, making the price decline stand out.
Note: Prices are levels at the time of reporting. Yen conversions are approximate, based on 1 dollar = about 160 yen.
Ethereum also fell 4% simultaneously to below $2,000, and major cryptocurrencies are broadly weak. A 0.25% rate hike is seen as certain at the US Federal Reserve's December meeting, and expectations of higher rates are capping gains across risk assets. Market participants note that Bitcoin has erased all the gains accumulated since late August and that a drop below $65,000 cannot be ruled out.
Meanwhile, in Japanese equities, global stock index MSCI removed crypto-holding companies Strategy and Metaplanet, but selling in both stocks was limited. This contrasts with the sharp selling when a similar exclusion proposal was reported a year ago, and the dominant view in the market is that it was already priced in. Deutsche Bank's launch of crypto custody services is also being viewed as a medium- to long-term tailwind.
On the technical front, Bitcoin's price action appears close to a selling climax, and some see a bottom or rebound as near. However, investor sentiment has deteriorated after losing the important 200-day support line, and a period of searching for a bottom is likely to continue for the time being. Market focus is shifting to whether the break below $73,000 will prove to be a temporary correction or will allow a decline to $69,000.
