(CLO) Bitcoin fell sharply on November 12th as renewed concerns about technology stocks weakened investor risk appetite. The decline was further impacted by continued outflows from US spot Bitcoin ETFs.
The world's largest cryptocurrency at one point lost 3.6%, falling to around $71,900 in New York. Other digital assets also declined, mirroring the US stock market, amid uncertainties surrounding Nvidia that increased pressure on artificial intelligence ( AI ) stocks.
Nvidia is one of the companies that has benefited greatly from the wave of investment in AI infrastructure. However, recent negative news regarding the company's leadership has made investors more cautious.
Bitcoin's recovery from below $58,000 in July is also showing signs of slowing down. On Wednesday (November 11th), the cryptocurrency's price fell to its lowest level in nearly three months after better-than-expected US inflation data fueled concerns that interest rates could remain high or even rise further.
Dean Chen, an analyst at the cryptocurrency exchange Bitunix, believes Bitcoin is showing a shift in market structure. According to him, selling pressure is mainly concentrated in derivative products, while trading activity in the spot market remains relatively stable.
The cumulative volume differential (CVD) in the futures market, a measure of the correlation between buying and selling pressure, has shifted into distinctly negative territory. Meanwhile, open interest has also decreased. According to Mr. Chen, these signals indicate that investors are scaling back leveraged positions, although overall market sentiment remains inconsistent.
The outflow of capital from spot Bitcoin ETFs in the US is also a significant factor putting pressure on the market. Since October 30th, inflows into these funds have reversed, with total net outflows of approximately $2.5 billion.
Furthermore, the results of the US midterm elections could add further instability to the cryptocurrency market. A Democratic victory and control of both houses of Congress next year risks escalating the confrontation between the legislative branch and the administration of President Donald Trump , who has a more open stance towards digital assets.
Another factor is MSCI Inc.'s decision to remove Strategy Inc., the company holding the largest amount of Bitcoin among listed companies, from its global stock indices. According to Caroline Mauron, co-founder of Orbit Markets, while this decision was anticipated, it still contributed to increased market uncertainty following the US midterm elections.
She believes Bitcoin currently lacks short-term support as the price declines. The $70,000 mark will be a key level to watch in the coming period.
Selling pressure also spread to shares of companies related to cryptocurrencies. Strategy shares saw an 8% drop, Coinbase Global lost 4.5%, and Circle Internet Group fell 5.3%.
