Bitcoin (BTC-USD) extended declines on Monday following last week’s record highs as investors took profits from the latest crypto rally.
The world’s largest cryptocurrency sank 2%, hovering just above $115,000 in early trading after surging past $123,500 last Thursday.
Expectations of Fed rate cuts, coupled with heavy purchases from corporate treasuries, have driven the price of bitcoin up 23% year to date.
Ether (ETH-USD), the second-largest crypto by market cap, also declined 3% to hover near $4,350 per token following a surge last week to its highest level of the year and approaching its record high just below $4,900.
“The sharp pullback in cryptocurrencies comes as the market is getting deleveraged following the peaks recorded last week,” said Samer Hasn, senior market analyst at foreign exchange trading platform XS.com, pointing to “an erosion of bullish momentum.”
Hasn pointed out that since last Thursday, more than $1.7 billion in long crypto futures positions have been liquidated, according to CoinGlass data.
The sell-off comes as the broader market rally has paused, with the S&P 500 (^GSPC) hovering near record levels.
Late last week, bitcoin and other digital assets slipped from highs as hopes of a 0.5% interest rate cut from the Federal Reserve in September fizzled on the heels of a hotter-than-expected wholesale inflation print.
Read more: Can you buy crypto with a credit card? See the pros and cons.
Investors will be searching for clues on the policymakers’ next move when Fed Chair Jerome Powell speaks at the Jackson Hole Economic Symposium this Friday.
“If Powell maintains a ‘wait-and-see’ approach, BTC will likely struggle to break higher in the near term, instead consolidating within the $115,000-$120,000 range,” crypto derivatives exchange Bitunix analyst Dean Chen said. “A breakdown could expose $112,000, while holding above could allow another test of the $118,000-$120,000 resistance band.”
Crypto-related stocks like Strategy (MSTR), Robinhood (HOOD), and Coinbase (COIN) slipped at the opening bell on Monday but recovered a chunk of losses through the first hour of trading.
Ines Ferre is a Senior Business Reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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