Bitcoin heads for sharp weekly loss amid weak investor sentiment

Bitcoin slid on Friday and is heading for a sharp weekly loss amid a sell-off triggered by tepid investor sentiment ahead of a huge options expiry.

The world's first and biggest cryptocurrency was down 0.58 per cent to $108,888.83 at 2.50pm UAE time, remaining below the $109,000 level it fell to earlier in the day, data from CoinMarketCap shows.

It fell as low as $108,776.78 in the past 24 hours and its market capitalisation was down about 2.5 per cent to $2.16 trillion.

From last week's close, Bitcoin is on pace to slide by nearly 6 per cent.

Ethereum, the second largest cryptocurrency, was down 0.63 per cent to $3,894.60, on track for a 14 per cent decline.

The overall crypto market cap was down 2.54 per cent to about $3.72 trillion.

Bitcoin topped $117,000 on September 18 ahead of the US Federal Reserve's hotly-anticipated interest rate decision, but it was unable to sustain the rally amid uncertain market expectations.

Adding to the weight was about $22 billion in crypto options set to expire on Friday. A crypto option is a derivative contract agreement giving the crypto holder the right − the “option” − but not the obligation, to buy or sell a specific underlying asset at a set price up until a set future date, also known as the expiry date, according to Crypto.com.

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Wrestling with downside pressure, after dipping to $112,000, Bitcoin is leaving traders focused on whether support at $111,600 will hold, said analysts at 1Konto, a New Jersey-based financial services firm.

“Market participants warn that failure to defend this level could accelerate losses toward $106,000 to $108,000, a zone widely seen as a buying opportunity,” they said.

“Despite dovish commentary from the Fed, Bitcoin has seen little relief, suggesting the asset remains tethered to risk sentiment rather than monetary policy alone.”

Cryptocurrencies remain a high-risk investment, notorious for their volatility easily triggered even by simple trends.

However, the industry received a big boost from the re-election of US President Donald Trump, who had pledged to support cryptocurrencies and has rushed legislation − most notably the Genius Act, Clarity Act and Anti-CBDC Surveillance State Act − to cement the legitimacy of the market.

Since then, Bitcoin has risen to new heights. It hit an all-time high of $124,002.49 on August 14.

But it has remained highly vulnerable to illicit activity: the cryptocurrency industry lost $22.7 billion in scams and hacks since 2011, blockchain analytics platform Crystal Intelligence said in a report earlier this month.