Market wrap: Bitcoin stabilizes after margin calls drive biggest drop for month

Bitcoin prices plunged as much as 19% in a violent sell-off on Monday, the biggest of the year in dollar terms with a loss of more than $ 10,000, before quickly recovering and settling around $ 54,000.

  • Bitcoin is trading around $ 53,884.35 at 21:00 UTC (4 pm ET). Slipping 6.45% in the last 24 hours.
  • Bitcoin 24-hour range: $ 47,780.75- $ 47,943.85 (CoinDesk 20)
  • BTC is trading between its 10-hour and 50-hour averages on the hourly chart, a side signal for market technicians.

Bitcoin has been trading on Bitstamp since February 15.
Source: TradingView

The day’s price swings occurred in large volume on major exchanges Bitfinex, Bitflyer, Bitstamp, Coinbase, Gemini, ItBit, Kraken, and Poloniex. Volume soared to more than $ 8 billion, the highest levels in nearly two weeks. By comparison, the figure was around $ 5.8 billion on Friday.

As CoinDesk previously reported, blockchain data showed that billions of dollars worth of bitcoins were transferred to exchanges on Sunday, as this year’s doubling of prices to levels above $ 58,000 apparently motivated some merchants to obtain Profits.

Bitcoin volumes on eight major exchanges followed by CoinDesk 20.

The majority of these bitcoin exchange inputs went to US-based Gemini, according to blockchain analytics firm CryptoQuant, indicating that the correction could be led primarily by US investors and traders.

Another indicator provided by CryptoQuant, the ‘Coinbase Premium’, which tracks the gap between Coinbase Pro’s BTC / USD pair and Binance’s BTC / USDT pair involving the stablecoin tether, also turned negative during the first hours of trading in the US on Monday, seen as a sign of lackluster institutional demand.

Coinbase Premium
Source: CryptoQuant

Some analysts and traders were optimistic that prices would recover quickly and that the correction could have been healthy for the market after it went too high, too fast.

Monday’s selloff “is certainly the result of overconfident traders with unsustainable leverage,” Bendik Norheim Schei, head of research at Arcane Research, told CoinDesk. “It has been brewing for some time as the futures premiums have been very high lately. The dumping and liquidations of today’s leverage traders were necessary and healthy for the market. “

Speaking to CoinDesk last week, analysts and traders warned that bitcoin could face increased volatility due to an over-leveraged market, where the average ‘funding rate’ of bitcoin perpetuals – a fee that traders pay for leverage built into derivatives contracts, has increased dramatically on major exchanges, at a level not seen since February 2020.

The market turned extremely bullish last week after electric vehicle maker Tesla announced its $ 1.5 billion bitcoin investment, so it’s not surprising that a correction occurred after the sharp rise, said Hunain Naseer, publisher. OKEx Insights senior. .

“For now, even with the price rebounding, the market is not in an uptrend, and bitcoin needs to consolidate and regain levels of $ 55,000,” Naseer added.

Ether falls more sharply, while more than $ 25 million in DeFi loans were liquidated

Source: Blockchair

Ether, the second-largest cryptocurrency by market capitalization, was down on Monday, trading around $ 1,768.24 and sliding 8.32% in 24 hours at 21:00 UTC (4:00 p.m. ET).

Compared to bitcoin, ether’s reaction to Monday’s sell-off was more severe, just days after it hit a new all-time high above $ 2,000 on Friday.

“With ether trading one step behind bitcoin, weakness has spread here to a greater degree following the failed $ 2,000 breakout over the weekend,” Singapore-based quantitative firm QCP Capital wrote in its Telegram channel on Monday.

Ether is currently testing at a key support level around $ 1,700, as noted by QCP. If that fails, the next support level would be at $ 1,470.

While ether continues to plummet, gas rates on the Ethereum blockchain also hit all-time highs on Monday, according to data from Blockchair.

High gas rates are also likely to contribute to a $ 25 million worth of liquidation on decentralized finance (DeFi) lending platforms, as CoinDesk reported.

Read more: $ 25 million in DeFi loans liquidated as the price of Ether falls

Other markets

Digital assets on CoinDesk 20 are mostly in the red on Monday. Notable winners at 21:00 UTC (4:00 pm ET):

  • Orchid (OXT) – 13.55%
  • Ethereum Classic (ETC) – 12.71%
  • OMG Network (OMG) – 12.58%
  • Bitcoin Cash (BCH) – 11.85%
  • Algorand (ALGO) – 11.33%
  • Oil rose 4.14%. Price per barrel of West Texas Intermediate crude: $ 61.69.
  • Gold was in the green 1.34% and at $ 1808.07 at press time.
  • The yield on 10-year US Treasuries rose to 1,353% on Monday.

CoinDesk 20: the assets that matter most in the market

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