Bitcoin records largest single-day drop in two weeks, falls over 7%

Bitcoin witnessed a notable decline of over 7%, dropping to $62,500, marking its most significant one-day decrease in a fortnight. This downturn coincided with a widespread sell-off affecting cryptocurrencies and other high-risk assets, including stocks.

Despite this recent dip, Bitcoin maintains a solid 52% gain for the year thus far, largely due to increased investor interest in US exchange-traded funds backed by actual bitcoin holdings.

Currently, the cryptocurrency is down by 5.6% to $63,650, having reached a two-week low of $62,966, while Ether (ETH) also saw a decline of 6.7% to $3,276.

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Just last Thursday, Bitcoin reached a record high of nearly $74,000, prompting some investors to take profits. This trend was further influenced by a series of US data releases indicating that the Federal Reserve might not reduce interest rates as drastically as previously anticipated this year.

Over the past week, Bitcoin has witnessed a drop of nearly 9%, marking its most substantial week-on-week decline since last September, while ether has experienced a 13% decrease following an upgrade to the underlying Ethereum network.

Nonetheless, the broader crypto landscape hasn't displayed the same level of weakness. Alternative tokens, often referred to as 'altcoins', have attracted their own influx of investments.

According to Coingeecko, Solana network's SOL token surged by 19% in the past week, while Avalanche's AVAX coin experienced a 17% increase.

"In light of bitcoin's recent all-time high and subsequent correction, we anticipate a period of market recalibration as investors seek equilibrium amidst unprecedented inflows into spot bitcoin ETFs," analysts at exchange, Bitfinex said in a note, was quoted as saying by Reuters.

Also read: Bitcoin market cap surpasses Silver to take eighth spot in global asset rankings

The unpredictability of monetary policy poses risks, with ongoing inflationary pressures dampening hopes for relaxed Fed policies. Additionally, Japan recently concluded its unprecedented monetary stimulus program, eliminating the world's final negative interest rate, further adding to the uncertainty.

Ever since their inception, ETFs have garnered a total net inflow of $12 billion. This surge in investor interest pushed Bitcoin to reach an unprecedented high of $73,798 last week. However, the cryptocurrency has experienced volatility as the initial surge in demand for ETF products subsides, with concerns arising about bubble-like characteristics in certain assets.