The world’s largest cryptocurrency fell 2% to $62,456.0 by 08:43 ET (12:43 GMT), tracking overnight declines in stock markets.
Losses in crypto came in tow of broader losses across risk-driven markets, as sentiment was soured by a slew of geopolitical risks.
Canada imposed fresh trade tariffs on China, following similar measures from Europe and the U.S. and drawing Beijing’s ire. The move ramped up concerns over a renewed trade war with the West, which bodes poorly for the world’s biggest economies.
A spike in oil prices also spooked markets, as an Israel-Gaza ceasefire showed little signs of materializing, while a row in Libya over the central bank’s leadership saw all oil production in the country grind to a halt.
The increased geopolitical risks offset recent cheer over lower U.S. interest rates, sparking losses across stock and crypto markets. Gold saw some safe haven demand, as did the dollar, which recovered from 13-month lows.
But Bitcoin still retained a bulk of its gains made over the weekend, as dovish comments from the Federal Reserve cemented expectations for a September interest rate cut.
Traders were split over a 25 or 50 basis point reduction, CME Fedwatch showed.
The prospect of lower rates bodes well for speculative assets such as crypto, given that it frees up more liquidity that can be invested into the sector. This notion was a major driver of crypto’s 2021 bull run.
Bitcoin was also supported by some expectations of a friendlier regulatory environment in the U.S., after independent presidential candidate Robert F Kennedy Jr suspended his campaign and endorsed Republican frontrunner Donald Trump, who is also running on a pro-crypto platform.
Trump has maintained a much more favourable stance on crypto over Democratic candidate Kamala Harris, spurring bets that a Trump presidency will bring friendlier regulation.
Among broader crypto markets, altcoin prices also retreated on Tuesday, falling in tandem with Bitcoin.
World no. 2 token Ether sank 4% to $2,614.4.
SOL, ADA and XRP lost between 0.5% and 3.5%, while MATIC shed over 3%.
Among meme tokens, DOGE fell 3.2%.
In other related news, analysts at Architect Partners said the bitcoin mining sector is currently experiencing a consolidation phase, largely driven by the recent halving event in April.
“The strategic driver is to secure large and scalable data center capacity with access to low cost power and capital, all made easier as a company gets larger,” the investment bank said in a report seen by CoinDesk.
A key example of this trend is Bitfarms Ltd (TSX:BITF)’ planned acquisition of Stronghold Digital Mining Inc (NASDAQ:SDIG). This move comes on the heels of Bitfarms being the target of an unsolicited takeover bid from rival miner Riot Platforms (NASDAQ:RIOT) in May.
Riot has since purchased 19% of Bitfarms’ stock on the open market, pushed to replace management, and engaged in a proxy battle to replace two board members. In response, Bitfarms announced its acquisition of Stronghold, along with management and board changes.
“Sometimes the best defense is offense,” Architect Partners noted.
However, the note also cautions that hostile M&A activity can be challenging, particularly in sectors like technology and financial services, where the talent of individuals is crucial. “Bitcoin mining is very different where physical facilities with access to electricity and widely available computing equipment are the core assets,” the analysts explain.
Interestingly, they point out the irony of this consolidation, as bitcoin’s creator, Satoshi Nakamoto, originally envisioned a decentralized network where anyone could mine cryptocurrency, and no single entity would control a large portion of the hashrate—a measure of competition and mining difficulty.
The impact of this consolidation on the industry remains to be seen, but some, like Jack Dorsey and his company Block, are actively working to counter this trend by “building semiconductors and systems to support a return to mining decentralization,” the report adds.
Source: Cryptocurrency - investing.com
