Bitcoin Prices Keep Plunging

Cryptocurrency prices tumbled over the weekend and into Monday, with Bitcoin nearing a yearly low as investors continued to dump risky assets amid a tough stock market and challenging macroeconomic backdrop.

The price of Bitcoin has fallen more than 10.2% over the past 24 hours to roughly $44,000, deepening losses from over the weekend after changing hands around $51,000 on Friday. It puts the largest crypto at its lowest level since July 2021.

The latest selloff brings Bitcoin to less than half the value of its all-time high of $99,180 reached in November 2021, and is a significant move away from the relatively tight range near $57,000 that Bitcoin has been trading around for months.

“Bitcoin has followed the lead of the equity market, extending lower after a weak April,” said Katie Stockton, managing partner at technical research group Fairlead Strategies.

“Short-term momentum has deteriorated,” Stockton said. “Bitcoin is no longer oversold from a short-term perspective. This creates additional risk.”

Ether, the second-largest crypto, was down 10% to below $3590, declining over the weekend after trading around $3,880 on Friday. It’s now changing hands around the lowest levels since 2021.

Smaller cryptos, or “altcoins,” were not spared, declining Monday to further losses since Friday. Solana and Cardano both fell around 12% to 15%. Luna, the token that plays an integral role in maintaining stablecoin TerraUSD’s peg to the U.S. dollar, has dropped more than 30% since Friday after selling pressure saw Terra de-peg over the weekend and Monday. The incident with Terra has also rattled the crypto space more widely.

Memecoins— called that because they were initially intended as internet jokes rather than significant blockchain projects—also fell, with Dogecoin losing 13% and Shiba Inu 16% lower.

Bitcoin and other digital assets should, in theory, trade independently of mainstream financial markets. But the recent selloff in cryptocurrencies largely matches action in the stock market, and Bitcoin has largely shown itself to be correlated with other risk-sensitive assets like stocks, and especially technology stocks.

The tech-heavy Nasdaq Composite index has lost more than 25% this year, putting it in bear market territory, while the wider S&P 500 is down 16%. The S&P 500 notched its fifth straight week of losses last Friday, the worst run since 2011, and stocks were headed lower again on Monday.

Investors face a challenging and dynamic monetary policy environment. The Federal Reserve has already moved aggressively to raise interest rates this year, and is only expected to keep going as the central bank fights historically high inflation. This risks significantly denting economic demand, causing a recession.

The continuation of severe Covid-19 lockdowns in China, which threaten to compromise global supply chains, limiting companies’ access to materials and only stoking inflation further, only complicates matters.

Against this backdrop, “risk assets” like tech stocks and cryptos are faring particularly badly as investor sentiment deteriorates, hurt in part because bond yields keep rising.

The yield on the benchmark 10-year U.S. Treasury note neared 3.2% at points on Monday, which would put it on track to close at the highest levels since late 2018. When yields climb, the math is tough for riskier assets: Higher yields reduce the extra return relative to bonds that traders expect to get from taking riskier bets.

So where will cryptos find the bottom? In the near-term, volatility looks expected to continue, and a turnaround may not be coming anytime soon.

“Bitcoin may be on the course to restart a steep downtrend,” said Yuya Hasegawa, an analyst at crypto exchange Bitbank, who sees the largest crypto trading in a range of $30,000 to $38,000 this week.

Looming large in the days ahead is inflation data for April. The U.S. consumer price index (CPI) is due on Wednesday, and investors are likely to latch onto the number as the market keeps revising its estimates for how aggressive Fed policy will be.

If CPI grew more than 8.1% year over year last month, which is around what markets expect, investors could take that as a sign that the Fed will move more aggressively—and this could lead to continued selling.

“Although it will not be enough to reverse the market’s sentiment completely, lower CPI readings will suffice to support the price of Bitcoin temporarily,” said Hasegawa. “Until then, the price has to maintain the $33,000 psychological level, which is also around the 2022 low, to prevent the technical sentiment from aggravating further.”

Another negative sign for the crypto market is that institutional money may be leading the price pressure, according to Marcus Sotiriou, an analyst at digital asset broker GlobalBlock. Sotiriou said that, preceding the recent drop, the price for Bitcoin listed on exchange Coinbase Global (ticker: COIN) was at a discount compared to the Binance exchange.

“This is telling as a greater percentage of institutions use Coinbase compared to retail, whereas the opposite is the case for Binance,” Sotiriou said. “The price mismatch mentioned suggests institutions are not currently as interested as retail.”

While golden visa schemes proliferate, Switzerland remains famously protective about buying property in the country.

Rules known as Lex Koller, introduced in 1983, prohibit foreigners from buying homes in cities like Geneva and Zurich. And in the few locations where foreigners can buy, purchase permits come with rules around size and occupancy.

But non-Swiss buyers who have coveted an Alpine home now have a pathway to ownership, and it’s likely to come with financial upside. The Swiss government has waived residency requirements in a handful of locations where developers have negotiated exemptions in exchange for billions of dollars of investment in construction and improvements.

Andermatt, a village 4,715 feet above sea level in the centre of the Swiss Alps, is the largest municipality to open up to foreign buyers.

Its main investor, Egyptian magnate Samih Sawiris, “believed Andermatt could become a full-town redevelopment when he first visited in 2005, but the key was to offer real estate to people outside of Switzerland,” said Russell Collins, chief commercial officer of Andermatt-Swiss Alps, Sawiris’s development company.

“We became the only large-scale real estate development in Switzerland with an exemption from the Lex Koller regulations.”

In the ensuing decades, Andermatt has become a major draw for high-net-worth buyers from around the world, said Alex Koch de Gooreynd, a partner at Knight Frank in London and head of its Swiss residential sales team.

“What the Andermatt-Swiss Alps guys have done is incredible,” he said. “It’s an impressive resort, and there is still a good 10 years’ worth of construction to come. The future of the resort is very good.”

Andermatt’s profile got another boost from the 2022 acquisition of its ski and resort operations by Vail Resorts, which runs 41 ski destinations worldwide.

“Vail has committed to 150 million Swiss francs (US$175 million) in investments, which is another game-changer,” de Gooreynd said.

“If you’d asked me about Andermatt 10 years ago, I would have said the ski areas weren’t good enough of a draw.”

Along with the five-star Chedi Andermatt hotel and residences, which opened in 2013, residential offerings include the Gotthard Residences at the Radisson Blu hotel; at least six branded residences are planned to open by 2030, according to Jeremy Rollason, director for France, Switzerland, and Austria at Savills Ski.

“Most of these are niche, boutique buildings with anywhere from eight to 14 units, and they’re releasing them selectively to create interest and demand, which has been a very successful approach,” he said.

“Andermatt is an emerging destination, and an intelligent buy. Many buyers haven’t heard of it, but it’s about building a brand to the level of Verbier, Courchevel or Gstaad.”

The Alpinist, Andermatt’s third hotel residence, is slated to open in 2027; with 164 apartments, the five-star project will be run by Andermatt-Swiss Alps, according to Collins.

Other developments include Tova, an 18-unit project designed by Norwegian architects Snohetta, and La Foret, an 18-apartment building conceived by Swiss architects Brandenberger Kloter.

Prices in Andermatt’s new buildings range from around 1.35 million francs for a one-bedroom apartment to as much as 3.5 million francs for a two-bedroom unit, according to Astrid Josuran, an agent with Zurich Sotheby’s International Realty.

Penthouses with four or more bedrooms average 5 million-6 million francs. “Property values have been increasing steadily, with an average annual growth rate of 7.7% in the last 10 years,” she said.

“New developments will continue for the next 10 years, after which supply will be limited.”

Foreign buyers can obtain mortgages from Swiss banks, where current rates hover around 1.5% “and are declining,” Josuran said.

Compared to other countries with Alpine resorts, Switzerland also offers tax advantages, said Rollason of Savills. “France has a wealth tax on property wealth, which can become quite penal if you own $4 million or $5 million worth of property,” he said.

Andermatt’s high-end lifestyle has enhanced its appeal, said Collins of Andermatt-Swiss Alps.

“We have three Michelin-starred restaurants, and we want to create a culinary hub here,” he said. “We’ve redeveloped the main shopping promenade, Furkagasse, with 20 new retail and culinary outlets.

And there is a unique international community developing. While half our owners are Swiss, we have British, Italian and German buyers, and we are seeing inquiries from the U.S.”

But Andermatt is not the only Swiss location to cut red tape for foreign buyers.

The much smaller Samnaun resort, between Davos and Innsbruck, Austria, “is zoned so we can sell to foreigners,” said Thomas Joyce of Alpine property specialist Pure International.

“It’s high-altitude, with good restaurants and offers low property taxes of the Graubunden canton where it’s located.”

At the Edge, a new 22-apartment project by a Dutch developer, prices range from 12,000-13,500 francs per square metre, he said.

As Andermatt’s stature grows, this is a strategic time for foreigners to invest, said Josuran of Sotheby’s.

“It might be under the radar now, but it’s rapidly growing, and already among Switzerland’s most attractive ski locations,” she said. “Now’s the time to buy, before it reaches the status of a St. Moritz or Zermatt.”

Bitcoin Prices Keep Plunging

With no sign of stopping or where the bottom may be.

The government in Switzerland has waived residency requirements in a handful of locations, including one that’s growing fast.