Bitcoin fell to its lowest level in nearly four months on Thursday, extending its recent losses amid widespread aversion to cryptocurrencies, as heightened tensions in the Middle East fueled a wave of risk aversion.
Pressure continued to mount on the world's largest cryptocurrency due to institutional outflows from major Bitcoin-linked exchange-traded funds (ETFs), while investors shifted towards more attractive sectors such as artificial intelligence.
Bitcoin plunged to its lowest level in nearly four months at $61,442.70, before recovering some of its losses to trade at $63,832.40 by 4:30 AM Saudi Arabia time.
Bitcoin is under pressure from continued outflows from ETFs.
Bitcoin's sharp losses came amid continued capital outflows from spot ETFs, with institutional investors also turning away from cryptocurrency markets.
SoSoValue data showed outflows of around $396,000,000 from Bitcoin-linked ETFs on Wednesday, adding to outflows of around $1,020,000,000 seen earlier in the week.
This week's outflows followed institutional investors pulling a total of $3.7 billion from Bitcoin-linked ETFs over the past three weeks.
Behind these outflows was a growing aversion to risk in the face of macroeconomic turmoil caused by the US-Iran war.
Strategy Associates, the largest institutional holder of Bitcoin, also sent bearish signals to the market this week after conducting its first Bitcoin sale in nearly four years. Despite the relatively small amount of Bitcoin sold, the move raised renewed questions about the long-term viability of Strategy Associates' treasury model, particularly given its reliance on a sustained and consistent rise in Bitcoin prices.
Recent losses have pushed Bitcoin back to levels nearly 50% below its record high set in October.
The shift of investors towards AI stocks away from non-yielding crypto assets has also driven outflows from ETFs, given the fundamentals AI stocks offer and their exposure to a rapidly growing technology.
Cryptocurrency prices today: Altcoins continue their losses amid Iranian tensions
Cryptocurrency prices have generally declined in parallel with Bitcoin, in the near-total absence of positive catalysts.
The continued uncertainty surrounding the US-Iran war, coupled with the lack of clarity regarding peace negotiations, has also dampened the appetite for risk, particularly with regard to speculative, non-yielding assets.
The pressure on cryptocurrency markets was further increased by the flow of funds into the dollar, amid expectations that the continuation of the war would lead to inflation driven by rising energy prices.
Ether, the world's second-largest cryptocurrency, fell 4.6% to $1,785.40, while XRP dropped 4.1% to $1.1882.
Solana, Cardano and BNB all declined by between 5% and 9%.
Regarding meme currencies, Dogecoin fell by 4%, while $TRUMP declined by 7.8%.
