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Bitcoin prices fell last Friday and remained weak over the weekend.
Ozan Kose/AFP via Getty Images
Bitcoin and other cryptocurrencies were weaker on Monday, in line with the stock market, extending recent declines ahead of what could be a turbulent week of trading.
The price of
Bitcoin
lost less than 1% in the past 24 hours to around $21,200, off previous daily lows below $21,000. The biggest digital asset began its latest plunge on Friday, falling from above $23,000 to below $21,000, and continues to trade at less than a third of its November 2021 all-time high near $69,000.
“Bitcoin has fallen over 10% since Friday and is currently trading at around $20,900 and back below the 200 weekly moving average,” Marcus Sotiriou, an analyst at digital asset broker GlobalBlock, wrote in a note.
“Some believe that the significant selloff on Friday was caused by Celsius Network, which is bankrupt, getting approval to sell mined Bitcoin to cover their operations,” Sotiriou added. “It has been speculated that Celsius sold 7000 Bitcoin on FTX spot [exchange]which led to a cascade of liquidations.”
Liquidations refer to the forced sale by brokers of traders’ positions in the crypto futures market, which dominates the digital trading space. Positions on margin – created with borrowed money – can be sold at a moment’s notice if the value of the security, which is typically Bitcoin, falls below a required level.
If Celsius sold 7,000 Bitcoin – worth around $150 million – it would have added significant selling pressure to an already shaky crypto market, and could have caused the price of Bitcoin to fall enough to trigger a mass liquidation. In fact, $210 million worth of Bitcoin futures contracts were liquidated on Friday, according to data from Coinglass, the most since a mid-June selloff that saw Bitcoin fall from $30,000 to $20,000.
Cryptos were lower in line with the stock market. Although theoretically they should be uncorrelated assets, cryptocurrencies such as Bitcoin have been shown to be highly correlated with fluctuations in other risk-sensitive assets, such as stocks, and especially technology stocks. The technology-heavy one
Nasdaq Composite
the index lost 2% on Friday and futures tracking the index suggested losses of 1.5% on Monday; the
S&P 500
the index was correspondingly weak.
Investors are looking forward to the Jackson Hole Economic Symposium this week, and in particular Federal Reserve Chairman Jerome Powell’s speech. The Fed’s monetary policy path continues to dominate market sentiment, with traders’ expectations constantly shifting over the extent to which the central bank will continue to raise interest rates, even amid the risk of recession.
A recent rally in stocks has come along with optimism that the Fed may begin cutting interest rates in 2023, but that narrative has been challenged by messages from central bank officials that combating decades-high inflation remains a top priority. Powell’s comments at Jackson Hole could provide clarity on the market’s expectations for monetary policy in the coming months – potentially spurring a rally or more falls.
“From a macro perspective, the market is likely to be wary of Fed Chair Powell’s Jackson Hole speech scheduled for Friday, especially since several regional Fed presidents have maintained their hawkish outlook for September [decision on rates]”, Yuya Hasegawa, an analyst at crypto exchange Bitbank, wrote in a note.
“Bitcoin’s outlook for the week is quite unclear and the price is likely to fluctuate within a narrow range until Powell’s speech,” Hasegawa added. “The psychological level of $20,000 can be a reliable support for the price, and $22,000 is likely to be a resistance until then.”
Beyond Bitcoin,
Ether
— the second largest crypto fell 2.5%. Altcoins, or smaller tokens, were also weak, such as
Cardano
and
Solana
lost 2% and 3% respectively. Memecoins – originally internet jokes – were correspondingly lower, with
Dogecoin
3% in minus and
Shiba Inu
down 1%.
Write to Jack Denton at [email protected]
