Bitcoin found its footing on Thursday, stabilizing above a key technical level after briefly slipping below $66,000 in early US trade. The largest cryptocurrency recently changed hands at around $67,000, up around 1% over the past 24 hours.
The CoinDesk 20 index lagged with ether (ETH), XRP, BNB, and solana (SOL) flat to slightly lower over the same period, perhaps signaling continued caution in altcoins amid shaky crypto markets.
Crypto-related stocks climbed modestly higher across the board, with bitcoin miners CleanSpark ( CLSK ) and MARA ( MARA ) standing out with gains of 6%. Meanwhile, the S&P 500 and the tech-heavy Nasdaq 100 were down 0.3% and 0.6%, respectively.
On the political front, there were preliminary signs of progress on the bill on the structure of the digital asset market. As CoinDesk’s Jesse Hamilton reported, the White House hosting talks between crypto industry representatives and bankers gave an incremental move, though no compromise has yet emerged.
At the same time, cracks are still showing from the latest crypto crash. Chicago-based crypto lender Blockfills, CoinDesk reported, is exploring a sale after enduring a $75 million loan loss during the recent price crash and temporarily suspending client deposits and withdrawals last week. With crypto prices tumbling sharply in recent months, investors have been bracing for potential blowups like those in Celsius and FTX in 2022. For now, however, the fallout appears to be contained – on the one hand allaying worst-case fears, but on the other hand avoiding the kind of complete washout that set the stage for the bottom of the brutal run-22ar market and the brutal run-2 market.
Still, there remain risks outside the cryptosphere that leave investors hesitant to take risks.
Concerns about mounting stress in credit markets flared after private equity firm Blue Owl ( OWL ) permanently curbed redemptions in its $1.7 billion focused private credit fund. OWL fell 6% Thursday, while shares of other major private credit managers including Apollo Global ( APO ), Ares Capital ( ARES ) and Blackstone ( BX ) fell more than 5%.
Geopolitical tensions remain another overhang, with the prospect of US military action against Iran still in play amid an ongoing regional buildup. Crude rose another 2.8% above $66 a barrel. barrel, reaching the highest price since August.
Traders play defense
That caution is reflected in the crypto derivatives markets, pointed out Jake Ostrovskis, head of OTC at trading firm Wintermute. Many traders buy downside protection while limiting upside participation, he noted, meaning they are effectively paying for insurance against another decline while limiting potential gains in a breakout to the upside.
The average US bitcoin ETF cost basis is now close to $84,000, leaving a large proportion of ETF investors underwater – with a paper loss of 20% on average – and potentially vulnerable to “capitulation selling” if prices slide further.
Still, total ETF holdings remain within about 5% of their peak in bitcoin terms, suggesting institutions are trimming exposure rather than rushing for exits.
