Cryptocurrency stocks slide as Bitcoin price plummets

Prices continued to slump on Wednesday, plunging over $8,000 from yesterday's peak. The flagship cryptocurrency fell 5.42% to $57,328. After hitting an all-time high of $73,797.68 six weeks ago, it earlier fell to $56,500.

Bitcoin's losses also pulled down the prices of other cryptocurrencies. Ethereum, for example, fell more than 4% after surpassing $4,000 in March for the first time since December 2021, and recently fell below $2,900.

Christian Haralampiev, head of structured products at Nexo, told “The market may be tired, lacking stimulus and may be ready to test further bottoms in the $50,000 range.”

The slump in demand is also clearly visible in reduced purchases of Bitcoin from U.S. spot exchange-traded funds (ETFs). fell. Since the launch of the Bitcoin ETF, BlackRock’s iShares Bitcoin Trust even had zero new funds on its first day.

Increased miner selling has put more pressure on Bitcoin prices. In April, daily sales hit the highest level since early January. An increase in selling volume usually indicates that miners need to cover costs or realize some profits, which can further push prices down. Additionally, this move to cash out profits triggered a surge in long liquidations in leveraged Bitcoin positions.

Cryptocurrency-related stocks appeared to have halted early losses but were still unable to recover. MicroStrategy, the largest corporate holder of Bitcoin, fell 5%, while cryptocurrency exchange Coinbase (NASDAQ: ) fell 3.5%. Mining stocks also took a hit. Among the large players, shares of Riot Platforms (NASDAQ: ) and Marathon Digital (NASDAQ: ) fell 3.2% and 3.5%, respectively.

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According to CryptoQuant, the recent decline in Bitcoin prices is mainly due to withdrawals from large players and long-term holders. These “whales” and regular heavy investors have slashed monthly growth – from over 200,000 BTC at the end of March to 96,000 BTC now.

Overall, buyers with deep pockets cut growth rates from 12% to 6%. Therefore, this pullback is short-lived and it makes no sense for the rally to resume, because when these long-term holders start selling off more stocks, it usually means that the market is preparing for a more permanent downtrend.

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