Bitcoin experienced a shock retreat this morning, losing around 5% in early trading before recovering somewhat, after another banner week for the world’s largest cryptoasset.
The cryptoasset is currently trading around $41,700 having hit a high just above $44,000 last week – its highest level since March 2022, writes Simon Peters, cryptoasset market analyst at multi-asset investment platform eToro.
The reasons for the sudden pullback are unclear this early in the day but could stem from some investors taking profits after a significant price rise over several months. Bitcoin is currently up 146% over 12 months. Some overheating when a big run up in price happens is not unexpected.
Ether rose 2% last week, but saw a similar retracement this morning, falling by more than 5.5%. It is now trading around $2,220.
Week Ahead
We’re in for another big inflation and rates week as the US Federal Reserve, Bank of England and ECB announce their latest bank rate decision on Wednesday and Thursday respectively.
If the crypto market and bitcoin in particular are showing signs of weakness after weeks of gains then anything other than great news – i.e. more confirmation of pauses, or even suggestions of cuts – could give major cryptoassets a hit.
The US reported strong, rate-defying jobs growth last week, suggesting that the good news the market is looking for is likely not to be forthcoming. The latest US CPI data reports on Tuesday and will tee up the market for rate announcements in subsequent days.
The market often treads water ahead of these events but if this morning’s fireworks are a suggestion of things to come this week then investors might be in for a choppy ride.
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