Sentiment, leverage, and Bitcoin's signal

The people, companies and trends shaping the global economy.

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Bitcoin tumbled below $63,000 as the unwinding of leveraged bets and broader market turbulence deepened a selloff that has wiped out all of the gains since President Donald Trump’s election set off a speculative rush into cryptocurrencies. 

The token fell as much as 14% Thursday to $62,267, the lowest since October 2024. The rout has erased half of Bitcoin’s value since it reached a record four months ago and has spread to other tokens, related ETFs and companies like Strategy Inc. that hold vast sums of coins.

The downturn has marked an abrupt retreat from Bitcoin’s meteoric rise through much of last year, when the return of the crypto-friendly Republican to the White House sent investors piling into such tokens and the Wall Street vehicles that have sprouted up around them. The market started cracking this month as rising geopolitical tensions sent tremors across global financial markets and curbed risk taking. That sparked Bitcoin’s precipitous decline from mid-January and set off a self-reinforcing cycle of selling as funds liquidated assets to meet redemptions and unwind leveraged bets.

The slide has echoes of the one in 2022, when prices retreated sharply from the surge seen during the easy-money era of the pandemic as the Federal Reserve tightened monetary policy. It has already taken a toll on intermediaries like the exchanges Coinbase Global Inc., whose shares have tumbled more than 30% this year, and Gemini Space Station Inc., which said it plans to cut up to 25% of its workforce and wind down operations in the UK, European Union and Australia.

Today's show features:

• Paul Krugman, Nobel Prize Winning Economist and Research Professor at the City University of New York’s Graduate Center, on his latest Substack column about the dive in the price of Bitcoin and broader market for cryptocurrencies
• Jurrien Timmer, Director of Global Macro at Fidelity Investments, on the investing landscape and on whether the recent market downturn is a sign of what’s to come.
• Bloomberg Opinion Senior Executive Editor Tim O’Brien on his column examining the potential national security risks of the United Arab Emirates seeking deeper access to advanced American semiconductors
• James Cakmak, Co-Founder and Chief Investment Officer at Clockwise Capital, on quarterly earnings from Amazon

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