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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 lower on Monday, in line with the stock market, extending recent declines ahead of what could be a bumpy week of trading.
The price of
Bitcoin
lost less than 1% in the past 24 hours to reach around $21,200, compared to prior daily lows below $21,000. The biggest digital asset began its latest plunge on Friday, when it fell from over $23,000 to under $21,000, and continues to trade less than a third of its November 2021 all-time high, nearly of $69,000.
“Bitcoin has fallen more than 10% since Friday, currently trading at around $20,900 and below the 200 weekly moving average,” Marcus Sotiriou, an analyst at digital asset broker GlobalBlock, wrote in a note.
“Some believe Friday’s big selloff was caused by the bankrupt Celsius Network, which received permission to sell mined Bitcoin to hedge its operations,” Sotiriou added. “It was speculated that Celsius sold 7,000 Bitcoins on the FTX spot [exchange]which led to a cascade of liquidations.
Liquidations refer to a broker’s forced sale of traders’ positions in the crypto futures market, which dominates the digital trading space. Margin positions – made with borrowed money – can be sold in the blink of an eye if the value of the collateral, which is usually Bitcoin, falls below a required level.
If Celsius were to sell 7,000 Bitcoins, worth around $150 million, it would have added significant selling pressure to an already wobbly crypto market, and could have caused the price of Bitcoin to fall enough to trigger a mass of liquidations. Indeed, $210 million worth of Bitcoin futures were liquidated on Friday, according to data from Coinglass, the most since a mid-June selloff that saw Bitcoin drop from $30,000 to $20,000.
Cryptos have fallen in line with the stock market. While theoretically expected to be uncorrelated assets, cryptocurrencies like Bitcoin have been found to be largely tied to the swings of other risk-sensitive assets, like stocks, and in particular tech stocks. The tech-heavy
Nasdaq Compound
the index lost 2% on Friday and futures following the index implied losses of 1.5% on Monday; the
S&P500
the index was also low.
Investors are eagerly awaiting the economic symposium in Jackson Hole this week, and in particular the speech by Federal Reserve Chairman Jerome Powell. The Fed’s monetary policy trajectory continues to dominate market sentiment, with traders’ expectations constantly shifting as to how much the central bank will continue to raise interest rates, even amid recession risk.
A recent rally in stocks has been accompanied by optimism that the Fed could start cutting rates in 2023, but that narrative has been challenged by messages from central bank officials that the fight against the inflation at a high level for several decades remains a key priority. Powell’s remarks at Jackson Hole could clarify market expectations for monetary policy over the coming months, which could potentially spur a rally or more declines.
“From a macro perspective, the market will likely be on high alert for Fed Chairman Powell’s Jackson Hole speech scheduled for Friday, especially as several regional Fed chairmen maintained their hawkish outlook for the month of September. [decision on rates]wrote Yuya Hasegawa, an analyst at crypto exchange Bitbank, in a note.
“Bitcoin’s outlook for the week is unclear and the price will likely fluctuate in a tight range until Powell’s speech,” Hasegawa added. “The psychological level of $20,000 could be a reliable support for the price and $22,000 is likely to be resistance until then.”
Beyond bitcoin,
Ether
– the second largest crypto – fell 2.5%. Altcoins, or smaller tokens, were also weak, as
gimbal
and
Solana
lost 2% and 3% respectively. Memecoins – initially Internet jokes – were also inferior, with
Dogecoin
3% in the red and
shiba inus
down 1%.
Write to Jack Denton at [email protected]
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