Bitcoin slid below $ 60,000 as the euphoria over the first US crypto ETF dissipated and traders made a profit following a record rally.
The largest digital asset by market value fell as much as 6.4% to $ 58,132, hitting the lowest intraday price in nearly two weeks. It rose to $ 66,976 on October 20. Ether also plunged around 6% and the smaller tokens were hit, with Dash and EOS each dropping more than 10%. The Bloomberg Galaxy Crypto Index, which tracks some of the largest digital currencies, fell 5.3% at one point.
“I’m not surprised that Bitcoin hits a wall at $ 67,000, having surpassed the April high, given the speed of the $ 30,000 move in July,” said Antoni Trenchev, managing partner and co-founder of Nexo, a cryptocurrency lender. “Bitcoin needs to cool down before embarking on its next stage.”
Analysts said speculators are cutting positions as the launch of the first US Bitcoin exchange-traded fund fueled excitement and pushed prices to new all-time highs. Total liquidations of long crypto positions surpassed $ 700 million on Wednesday, the most since September 20, according to data from Bybt.com.
“The market has been leveraged for a long time for a few weeks, so there has been over-positioning,” said Jonathan Cheesman, head of institutional and over-the-counter sales at crypto derivatives exchange FTX.
Stephane Ouellette, CEO and co-founder of FRNT Financial Inc., a crypto-focused capital markets platform, said that some of the euphoria around ETFs has faded and liquidation has been exacerbated by the fact that there are much more leverage available in crypto to retail traders globally than in other asset classes.
“We already saw a fairly severe wave of leverage in the space that was evidenced by futures contangs, perpetual trading, and peer-to-peer lending rates, which skyrocketed around the launch of the BTC ETF,” said Ouellette. “In recent weeks, for example, we have seen monthly and quarterly contagions of BTC futures in the 20-30% range. While in some cases the leverage can become even more extreme, the activity in recent days has some telltale signs of a typical crypto check-back. ”
Ouellette cited that December BTC contango futures fell overnight to 13.5% from around 20% annualized on the FTX crypto derivatives exchange.
Bitcoin also broke below its 20-day moving average, a technical move that could invite more selling. Nexo’s Trenchev, meanwhile, says there is a clear head and shoulders pattern present, with $ 60,000 as a key level.
“Bitcoin broke below that at $ 58,000,” he said. Let’s see if he recovers. Otherwise, keep an eye out for $ 52k or $ 53k as possible destinations. ”
The ProShares Bitcoin Strategy ETF, or BITO ticker, racked up more than $ 1 billion in assets just days after its launch last week. For fans of cryptocurrencies, its premieres marked a watershed moment because they signify greater general acceptance and allow investors to purchase an investment vehicle that is readily available to a wider group of people.
“The price decline is being driven by sellers, who appear to be acting simultaneously to make a profit on their investment,” said Petr Kozyakov, co-founder and CEO of global payments network Mercuryo. “The price correction is organic and was not caused by a clear rationale.”
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