Bitcoin declined sharply on Monday, shedding over 3% to trade near $68,548 after failing to sustain a rally above $72,000. The pullback places the digital asset back below the psychologically significant $70,000 threshold as traders navigate a combination of operational risks and macroeconomic uncertainty.
Regulatory Scrutiny Follows Exchange Glitch
South Korea's Financial Supervisory Service announced plans for stricter cryptocurrency oversight after a significant incident at exchange Bithumb. The platform erroneously distributed approximately $40 billion worth of bitcoin to users during a promotional event, triggering a localized sell-off. Authorities reported that 99.7% of the 620,000 bitcoins have been recovered, citing "structural problems" in virtual-asset systems that necessitate stronger regulatory frameworks.
Thin Liquidity Amplifies Price Swings
Market analysts highlight deteriorating liquidity conditions as a key vulnerability. Data from Kaiko indicates bitcoin's average "1% market depth"—a measure of order book liquidity—has fallen to around $5 million from over $8 million last year. This thinning order book means even moderately sized trades can produce exaggerated price movements, with volatility persisting longer than typical market conditions.
Meanwhile, attention shifts to impending U.S. economic data, with delayed January nonfarm payrolls scheduled for Wednesday and January Consumer Price Index figures due Friday. These releases will provide crucial signals about the Federal Reserve's interest rate path, with markets currently pricing in the first potential rate cut for June. Robust employment or hotter-than-expected inflation data could reignite "higher for longer" rate expectations, typically pressuring risk assets like cryptocurrencies.
While selling pressure from large holders ("whales" controlling at least 10,000 BTC) shows signs of easing, analysts note few bullish catalysts currently supporting the market. The broader financial landscape saw global equities stabilizing after recent declines, with some investors selectively buying discounted assets including bitcoin.
