Bitcoin approached a closely watched price level as the slide in the largest cryptocurrency from its all-time high extended into a fifth week.
The digital asset dropped as much as 6% to $46,971 on Monday in New York trading. The Bloomberg Galaxy Crypto Index slumped as much as 4.9% to its lowest since early October, while popular DeFi tokens such as Solana, Cardano and Polkadot also slipped.
“The idea that as it matured, the volatility would ease has not really materialized,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. “The volatility is deadly and its other supposed attributes, like a hedge against inflation, seems spurious.”
Bitcoin’s decline brings it closer to its average price over the last 200 days, which currently stands around $46,720.
Bitcoin has dropped for four consecutive weeks as measured by the seven days ended Friday. Unlike most traditional asset classes and securities, digital tokens trade around the clock, often on lightly regulated online exchanges worldwide.
Bitcoin got a brief boost Friday after a report showed U.S. consumer prices accelerated, supporting the argument that the coin is a hedge against the erosive impact of inflation. On Dec. 4, the token tumbled as much as 21% before recouping around half the loss hours later. It’s still down about 30% from its record high of almost $69,000 reached Nov. 10.
Proponents have long argued that Bitcoin and other digital assets, on account of their being an idiosyncratic asset class, could act as hedges against swings in other areas of the financial market. Only 21 million Bitcoin will be put into circulation under the computer protocol that governs issuance, though that figure isn’t expected to be reached for another 100 years.
“It’s less of an inflation hedge and much more of a risk asset,” Art Hogan, chief markets strategist at National Securities, said by phone on Friday. “So to me it’s much more of the technical move, that it failed support and had come under pressure.”
© 2021 Bloomberg L.P.