Market Close: Bitcoin Settles Around $ 47K After Biggest 2-Day Drop In 11 Months

The Bitcoin selloff appeared to slow as prices settled at around $ 47,000, after the largest cryptocurrency by market cap posted its biggest two-day loss since March 2020 early Tuesday.

  • Bitcoin (BTC) is trading around $ 47,851.27 at 21:00 UTC (4 pm ET). Slipping 11.72% in the last 24 hours.
  • Bitcoin 24-hour range: $ 44,964.49- $ 55,053.91 (CoinDesk 20)
  • BTC is trading below its 10- and 50-hour averages on the hourly chart, a bearish sign for market technicians.

Bitcoin has been trading on Coinbase since February 17.
Source: TradingView

Bitcoin’s price fell along with US stocks after markets opened in the US on Tuesday, bringing the cryptocurrency’s slide from Sunday to 20%, the most in a period. two days since the coronavirus-fueled collapse in March 2020. The slide has wiped more than $ 100 billion from the market value of bitcoin, which last week surpassed $ 1 trillion for the first time.

And while many traders remain bullish on bitcoin in the long term, analysts said that the largest cryptocurrency may have to fall further in the coming days, traders and analysts said.

As is often the case in digital asset markets, this week’s decline did not appear to be linked to any specific negative news or fundamentals, but to technical factors such as worrisome signals from price charts and a general feeling that the market had gone too far. Too Fast: The price of Bitcoin had doubled this year to an all-time highest price of over $ 58,000 as of Sunday.

This week’s price decline trimmed 2021 earnings by as much as 59%, compared to 3.6% for the Standard & Poor’s 500 index of US stocks.

“The current market is extremely overheated,” Flex Yang, founder and CEO of Hong Kong-based crypto lender Babel Finance, told CoinDesk. Prices could fall as low as $ 40,000, he said.

Bitcoin volumes on eight major exchanges followed by CoinDesk 20.
Source: CryptoCompare

However, the price movement occurred with strong volume, indicating high activity from sellers and buyers alike. Trading volume on eight major exchanges tracked by CoinDesk surpassed $ 10 billion for the second day in a row.

Signals from the bitcoin derivatives market showed traders becoming slightly less optimistic, with futures contract premiums over spot prices declining on major exchanges including Deribit, Binance, OKEx and Huobi.

Premiums remain high compared to January levels, indicating that bulls still dominate the market.

Source: Skew

Arcane Research, a Norwegian cryptocurrency analytics firm, noted in its weekly newsletter on Tuesday that financing rates (fees that traders pay for leverage) have dropped sharply since Monday, a sign that part of the decline in the This week’s market may have shaken off some of the euphoria.

The funding rates for perpetual futures contracts are set by the market and vary over time as traders place and remove positions. When the market is bullish, the funding rates turn positive and traders who take long positions pay short sellers. When the market is bearish, funding turns negative and short sellers pay.

Arcane Research also warned that with perpetuals trading again at a “significant” premium to spot prices on Tuesday, finance rates are set to rise soon.

“Trying to catch a falling knife is a dangerous exercise, which could unleash a new cascade of liquidations in the short term,” Arcane Research wrote.

Source: Arcane Research

There appears to be little change this week in the outlook for loose monetary policy, prompting many institutional investors to buy bitcoin as a hedge against eventual inflation. Federal Reserve Chairman Jerome Powell, in his testimony Tuesday before the US Senate Banking Committee, stuck to his earlier message that loose monetary policy would not budge anytime soon, given the need to keep interest rates low while the economy recovers. .

“We view the current pullback as nothing more than a necessary correction to allow a very strong market to take time to consolidate and restart before eventually looking to continue on its upward trajectory,” Joel Kruger, cryptocurrency strategist at institutional crypto exchange LMAX Digital , saying.

And it appears that some have been buying the latest drop, as CoinDesk reported today.

Lower Ether; High fees force more settlements on DeFi lending platforms

Ether (ETH), the second-largest cryptocurrency by market capitalization, was down on Tuesday, trading around $ 1,524.42 and sliding 14.08% in 24 hours at 21:00 UTC (4:00 p.m. ET).

As with bitcoin, ether’s trading volume on major exchanges soared again on Tuesday.

Source: CryptoCompare

As the price of ether continued to correct, another record $ 115 million in loan positions in decentralized finance (DeFi) based on the Ethereum blockchain were eliminated on Tuesday, as reported by CoinDesk.

Read more: DeFi Lending Platforms Settle Down Record $ 115 Million In Loans As ETH Price Falls

Other markets

Digital assets on CoinDesk 20 are mostly in the red on Tuesday. There were no notable winners at 21:00 UTC (4:00 pm ET).

  • Oil rose 0.45%. Price per barrel of West Texas Intermediate crude: $ 61.98.
  • Gold was in the red 0.21% and at $ 1805.15 at press time.
  • The yield on 10-year US Treasuries fell on Tuesday, falling to 1.359%.

CoinDesk 20: the assets that matter most in the market

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