Bitcoin fell below the $80,000 mark on Monday as investors became more cautious ahead of a key Federal Reserve meeting. Concerns over heavy spending on artificial intelligence (AI), rising oil prices and uncertainty in global markets also put pressure on cryptocurrencies.
Bitcoin, the world’s largest cryptocurrency, fell as much as 1.4% to below $79,300 before recovering some of its losses. It later traded around $80,000 during afternoon trading in Asia, according to Bloomberg.
Bitcoin price today and ETF outflows
Bitcoin was down 0.4% at $80,227.70 by 1:52 am Eastern Time (5:52 am GMT) on Monday. The cryptocurrency had lost around $2,000 over the weekend as investor confidence remained weak. The decline in Bitcoin spread to the wider cryptocurrency market, with most major digital tokens trading lower on Monday. Ether, XRP, Solana and other altcoins also recorded losses.
US-listed spot Bitcoin exchange-traded funds (ETFs) saw $772.4 million in withdrawals on Thursday and Friday. This was a sharp reversal from the more than $1 billion in net inflows recorded earlier in the week, showing a change in investor demand for Bitcoin investment products.
AI spending concerns hit crypto markets
Investors are questioning the massive amounts of money technology companies are spending on AI. These concerns have affected technology stocks and other risky investments, including cryptocurrencies. Investors are also watching upcoming earnings reports from major technology companies for clues about whether heavy AI spending will pay off, according to Bloomberg.
The weakness in technology stocks continued in Asia on Monday. South Korea’s Kospi Index, which is closely watched as an indicator of the AI trade, fell 0.2%. Chip-related stocks were also among the biggest decliners in Japan’s Nikkei Index.
Caroline Mauron, co-founder of Orbit Markets, said Bitcoin had remained relatively strong despite concerns about AI-related debt that were affecting other risky assets. However, she said investors were now focusing on the Federal Reserve meeting, followed by the US midterm elections.
Pratik Kala, portfolio manager at Apollo Crypto, said Bitcoin remained part of the risk-off category for many systematic funds and algorithmic traders. This means that when market sentiment weakens, these investors may reduce their exposure to Bitcoin, putting further pressure on its price, according to Bloomberg.
Kala also pointed to online discussions about AI, including comments by SpaceX and Tesla CEO Elon Musk about possible consolidation in the sector next year. These discussions contributed to the uncertainty affecting markets, according to Kala.
Progress in AI has also increased concerns about possible security risks for the cryptocurrency industry. Kala said these risks were making some investors more cautious about digital assets.
Oil prices keep investors worried
Oil prices fell on Monday after a report of further talks between Middle Eastern countries and Iran raised hopes of easing tensions. However, prices remained close to their annual highs, keeping investors concerned about the possible impact on the global economy, according to Investing.com.
Fed meeting and interest rate outlook
The US Federal Reserve, European Central Bank (ECB) and Bank of Japan (BOJ) are all scheduled to meet this week. Markets widely expect the three central banks to leave interest rates unchanged, but investors are watching closely for signals about their future policy decisions.
All three central banks are expected to maintain a cautious approach because inflation remains persistent and energy prices pose additional risks. Their outlooks could leave the possibility of further interest rate hikes later this year open. Higher interest rates generally make risky investments, such as cryptocurrencies, less attractive and could put further pressure on prices, according to Investing.com.
Bitcoin struggles to recover as altcoins fall
Bitcoin has been trading near the bottom of a range of $80,000 to $87,000 established over the past month. The lack of positive developments for the cryptocurrency market has made it difficult for prices to recover.
The seasonal trend known as “Uptober,” which refers to the tendency for cryptocurrency prices to rise in October, has failed to materialise for the second consecutive year. Weak confidence among both individual and institutional investors has added to the pressure on the sector.
Ether, the world’s second-largest cryptocurrency, fell 0.9% to $2,320.05 on Monday. XRP declined 0.5%, Solana dropped 0.2%, Cardano fell 0.8%, and BNB slipped 0.2%. These declines reflected the broader weakness across the cryptocurrency market, according to Investing.com.
Not all cryptocurrencies moved lower on Monday. Dogecoin rose 0.4%, while the $TRUMP token fell 0.6%, showing mixed performance among memecoins as investors remained cautious.
