The price of bitcoin collapsed overnight from Saturday to Sunday, falling to a low near $ 43,000.
The world’s largest cryptocurrency then eased its losses and last traded around $ 49,663, according to data from Coin Metrics.
In the space of 24 hours, from Friday morning to Saturday morning, the price of bitcoin plummeted from around $ 57,000 to $ 47,000, losing $ 10,000, or more than 17%.
The price of ether also fell to a record low, nearly $ 3,500, on Saturday. It recovered somewhat on Saturday night, trading at $ 4,233. Ether, which is the second largest digital currency in the world in terms of market value, lost more than 16% between Friday morning around 8:00 am CET and Saturday around 8:00 am CET.
Cryptocurrencies began to slide on Friday as stocks fell back and investors took refuge in the safety of Treasuries, pushing the 10-year yield lower. Among the biggest losers on Wall Street on Friday were tech venture stocks, with Tesla shedding 6%. The ARK Innovation fund lost 5% on Friday and 12% during the week.
As the mood in the tech industry has deteriorated, these investors may have started dumping their crypto assets as well.
However, there was no clear reason for the decline in cryptocurrencies, especially on Saturday night when losses accelerated.
“Everything indicates that this is another derivatives-induced selling event,” JC Parets, director of market strategy at technical research firm All Star Charts, wrote in a note Saturday morning. “The sudden crash in September had the same causes as this sell-off: leverage was violently pushed out of the system, allowing the market to finally move to a new all-time high in October. “
Will Clemente, an outlook analyst at Blockware Solutions, agreed that the sale was based on derivatives, adding that open interest was at its highest for more than a month as funding rates were positive. He also said that it could be a setup for another bull run similar to the one that started earlier this year.
“The opposite effect can reasonably be expected as the first quarter approaches as the funds are prepared to take more risks for the new year with further gains and losses,” he said. “This effect was fundamental in the massive movement of bitcoins in January 2021.”
He added that the dynamics of the network remains “healthy and shows that the supply continues to advance towards long-term investors.” “
The two cryptocurrencies have seen turbulent trading since the appearance of the omicron variant of Covid, following in this global stock markets which have also been volatile. On November 26, bitcoin hit its lowest level in seven weeks, near $ 54,000, officially entering bear market territory.
Bitcoin is now around 30% below the all-time high of nearly $ 69,000 it hit in early November. Bear markets are generally defined as a drop of 20% or more from recent highs.
The World Health Organization said Friday that the omicron variant of Covid has been detected in 38 countries, up from 23 two days ago, and initial data suggests the strain is more contagious than delta.
Parets noted that “choppy” price movements are expected in the coming days and weeks. “After such a sharp move, there will likely be a baseline and hiring process, and we want to approach large increases more cautiously now,” he said.
Katie Stockton of Fairlead Strategies said long-term momentum continues to build despite the correction. He advised investors not to reduce their holdings of bitcoin or other correlated altcoins until the decline is confirmed, which could mean waiting until Monday to reassess the situation.
“It’s rarely a good idea to sell during an emotional recession like this, given the possibility of a hitch,” Stockton said. “A close above $ 48,000 tonight would be positive based on the current highs range. “
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