Crypto hack adds to shaky outlook for bitcoin despite US support

Bitcoin has slumped 13 per cent in recent weeks, ethereum almost twice as much, and cryptocurrency’s short-term outlook is shaky.

The world’s biggest cryptocurrency, bitcoin, has sunk in value since last month’s inauguration of the first crypto-friendly US president, Donald Trump, and there are concerns it could slide further.

Rising nervousness around geopolitics, the US economy and Mr Trump’s unpredictable and rapid-fire policy changes have pushed bitcoin more than 13 per cent lower since January 20, from $US106,000 to $US92,000.

A fresh hacking scandal has added to negativity, with analysts labelling last week’s $US1.5bn ($2.4bn) theft from crypto exchange Bybit the biggest in the ­industry’s history.

IG market analyst Tony Sycamore said while the crypto stolen from Bybit was primarily ethereum, bitcoin could still sink towards $US80,000 in the coming weeks.

“It’s been a bit of a rocky old ride,” he said. “A lot of good news was priced in, and then we started to see some tailwinds replaced by headwinds.

US President Donald Trump supports cryptocurrency. Picture: Getty Images

“Bybit’s CEO has assured clients that the exchange has taken out bridging loans and can cover the loss until the stolen assets are recovered. Hmmm.”

The price of ethereum, the world’s second-largest cryptocurrency, has fallen harder than that of bitcoin since the January 20 ­Trump inauguration, down 24 per cent from $US3300 to about $US2500.

Mr Trump flagged a crypto-friendly administration in the lead-up to the US election, fuelling a strong rally late last year, and some of his appointments have reflected this.

Mr Sycamore said bitcoin had traded sideways in recent weeks but now uncertainty around tariffs, trade and other issues were affecting sentiment.

“Do you really want to be at the pointy end of the risk spectrum, which is bitcoin?” he said.

“I don’t know where the next dose of good news comes from – the risk is we start to see some bad news.

“There was hope that we’d come a long way from the Sam Bankman-Fried/FTX [2023 fraud conviction] era, but now it seems people are having second thoughts.

“There’s certainly some nervous moments out there for the Johnny-Come-Latelys in the crypto space.”

Capital.com senior financial market analyst Kyle Rodda said bitcoin movements were “very much driven by narrative and momentum”, and for most of the past six weeks it had been stable.

“Bitcoin has been the least volatile that I have ever seen it, and for the first time in its history it wasn’t moving much,” he said.

The latest loss of momentum could be a barometer for the broader market’s risk appetite, Mr Rodda said.

He said the Bybit hack had changed the narrative around the security and safety of crypto ­tokens, and a short-term fall back towards $US70,000 “wouldn’t be surprising”.

Bitcoin historically had 30-40 per cent price swings at least annually and “I think it’s poised for a bit of a pullback”, Mr Rodda said.

“It’s an opportunity for sellers to take profits,” he said.

Mr Rodda said he expected bitcoin to keep rising “in the long run” but a sharp fall in the coming months would not be surprising.

“If it drops by 30 per cent, that won’t be the death knell for cryptocurrency,” he said.

FxPro chief market analyst Alex Kuptsikevich said crypto market dynamics “generally resemble a bouncing ball, getting lower and lower all the time”.

“The market is accumulating risks that we will get a compressed spring effect with a sharp move in one direction in the coming days,” Mr Kuptsikevich said.

Originally published as Crypto hack adds to shaky outlook for bitcoin despite US support