Crypto crash: Bitcoin falls for the eighth consecutive week

Bitcoin fell about 2.2 percent on Friday to $28,800 at 1 p.m. in New York, hit by macroeconomic headwinds from the Fed’s monetary tightening and crypto-specific fallout from this month’s implosion of the algorithmic stablecoin. TerraUSD, which continues to affect digital assets, particularly those related to decentralized finance. In total, the crypto market has lost some $500 billion in market value so far in May, a drop of 29 percent.

For a second day, cryptocurrencies declined even as risky assets like stocks surged, marking a break from their recent close relationship, and a sign of shaky conviction that could herald a worrying trend.

The market swoon “took a lot of confidence out of the asset class,” Matt Maley, chief market strategist at Miller Tabak + Co., said by email. “So, as investors get a little more confident in the markets in general, they look to other areas to buy because of the weakness. They don’t want to get burned on crypto again.”

Ether, the second-largest cryptocurrency, and other altcoins tied to popular DeFi projects like Avalanche and Solana were among the biggest drops, down between 4% and 7% on Friday. And in the non-fungible token market, even popular collections like Bored Ape Yacht Club and Cryptopunks are under pressure, market data shows. Meanwhile, short interest in the first US Bitcoin futures-backed exchange-traded fund is near the highest since the fund’s inception in October 2021, as investors increase bearish bets.

With reverberations from the Terra crash hitting altcoins harder, Bitcoin now claims a larger share of the cryptosphere, accounting for 44 percent of the total market value. That is the most since October, just before the last bull market peaked, according to data from CoinGecko. But it’s not that Bitcoin has been spared: It is now down 60 percent from its all-time high in November, though it has generally traded in a range of $28,000 to $30,000 over the past two weeks.

The largest cryptocurrency remains below its 20-, 50-, and 200-day moving averages. “With every moving average currently sloping lower, it is the epitome of a downtrend,” said Frank Cappelleri, a trading desk strategist at Instinet.

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