Bitcoin has started the week with a noticeable decline, mirroring the trend seen in global stock markets. The cryptocurrency fell sharply following remarks from the Bank of Japan (BoJ) that rekindled concerns about global economic stability.
Bitcoin, which recently hit a high of $73,835, has now dropped approximately 6.5% over the past week.
On September 3, its value fell further to an intraday low of $57,556, influenced by a broader market downturn. The Dow Jones Industrial Average slid 1.2%, the S&P 500 dropped 1.3%, and the Nasdaq Composite fell 1.8% on the same day.
The BoJ’s comments, particularly hints at further interest rate hikes, contributed to this decline.
BoJ Governor Kazuo Ueda’s statement, delivered to a government panel, suggested that the central bank may continue to raise rates if economic conditions warrant it.
This led to a stronger yen and heightened volatility in global markets, reminiscent of the market turmoil witnessed in July when the BoJ last adjusted its policy.
The yen’s appreciation against the dollar, coupled with a significant sell-off in equities, resulted in a quick drop for Bitcoin, highlighting the cryptocurrency’s sensitivity to macroeconomic shifts.
The yen’s strength led to a reduction in yen carry trades, which has historically impacted risk assets, including Bitcoin.
Retail interest in Bitcoin has also diminished. Despite the cryptocurrency’s earlier peak, there has been a notable decrease in demand among retail investors, as highlighted by a recent Google Trends report showing search interest for “Bitcoin” has hit a 12-month low.
This decline is supported by observations from crypto analysts who note that while institutional transactions continue, retail enthusiasm is lacking.
Despite the current price fluctuations, Bitcoin is viewed as fairly valued based on its fundamental analysis.
The cryptocurrency remains within a price range of $50,000 to $70,000, which some analysts, like Root, believe reflects its intrinsic worth.
Looking forward, VanEck, a major wealth management firm, remains optimistic about Bitcoin’s future, predicting potential price targets ranging from $2.9 million to $52.38 million by 2050, signalling long-term confidence despite short-term volatility.
