Bitcoin Slumps On Elon Musk Sale, China Concerns

A sudden drop in Bitcoin and other cryptocurrencies that began late last week was a reaction to broader sell-off pressures for riskier assets, analysts said.

The drop, which followed more than a month of unusual stability for Bitcoin, was also due to ongoing regulatory pressures, according to indsutry watchers.

Other cryptocurrencies, including XRP, Litecoin and Bitcoin Cash also saw steep price drops.

Bitcoin had traded at near $30,000 (£25,500) for more than a month following several regulatory applications by financial companies looking to open spot Bitcoin exchange-traded funds (ETF) in the US, notably one in June from New York City-based investment management firm BlackRock.

SpaceX Bitcoin sale

Enigma Securities head of research Joseph Edwards said optimism spurred by BlackRock’s application had been keeping crypto markets inflated for much of the summer.

Last week the Wall Street Journal reported that Elon Musk aerospace firm SpaceX had written down the value of its Bitcoin holdings by $373m and had then sold its holdings.

Some analysts said the report had helped spur the crypto sell-off, with eToro global markets strategist Ben Laidler saying it was the “immediate catalyst”.

But Laidler said the main driver was a broader economic pressure pushing investors to sell all kinds of riskier assets.

Economic concerns

Those wider pressures include a sell-off of Asian shares over concerns about China’s economy and fears US interest rates would remain high.

Amongst the worrying economic news from China last week was the US bankruptcy protection filing of property developer China Evergrande Group, which was part of one of the world’s largest debt restructurings.

“While the dip might appear sudden, it was precipitated by a combination of events that contributed to the decline,” wrote James Butterfill, head of research at digital assets investment firm CoinShares, in a note.

Bitcoin is nevertheless continuing to trade substantially higher this year after large drops in 2022 due to the failure of exchange FTX and a number of other high-profile crypto firms.