Bitcoin slid below $ 60,000 as the euphoria over the first US crypto ETF wore off and traders made a profit after 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 peaked at $ 66,976 on October 20. Ether also plunged roughly 7.5% and the smaller tokens were hit as well, with Dogecoin and Solana each dropping more than 8%. The Bloomberg Galaxy Crypto Index, which tracks some of the largest digital currencies, fell 7.5% at one point.
“I am not surprised that Bitcoin hits a wall at $ 67,000, having surpassed the April high, given the speed of the move of $ 30,000 in July,” said Antoni Trenchev, managing partner and co-founder of Nexo, a lender of cryptocurrencies. “Bitcoin needs to cool down before embarking on its next stage.”
Many smaller “alt” coins were hit the hardest: Cardano lost 11% in the last 24 hours and Polkadot fell about 9%, according to Coinmarketcap.com.
“They have always been more volatile, so it’s not a huge surprise,” said Matt Maley, chief market strategist at Miller Tabak + Co. “Those cryptocurrencies are in weaker hands. Most people think that a small amount of these alt will survive, so they tend to sell faster than Bitcoin or Ethereum. ”
Speculators are cutting positions after the launch of the first US Bitcoin exchange-traded fund fueled excitement and pushed prices to new all-time highs, analysts said. 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.
Bitcoin was down 5.3% to $ 58,823 at 4:27 pm in New York. It has more than doubled this year.
Stephane Ouellette, CEO and co-founder of FRNT Financial Inc., a cryptocurrency-focused capital markets platform, said that some of the euphoria around ETFs has faded and the sell-off has been exacerbated by the fact that There is much more. Leverage available in cryptocurrencies 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 futures contango fell overnight to 13.5% from around 20% annualized on the FTX crypto derivatives exchange. Contango occurs when futures trade at a premium to spot prices.
Bitcoin also fell 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. ”
Crashing through $ 60,000, Bitcoin broke its previous resistance-turned-support level; Its latest leg to the downside means that it could find support around its 50-day moving average of around $ 51,555. Furthermore, its liquidation in the last two sessions has carried its 14-day Relative Strength Index (RSI) of levels. from overbought to near neutral.
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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