The complete overview of the day's events on the (crypto) markets. Compactly summarized in the market commentary of the CVJ.CH editorial team.
In mid-June, the world-leading asset manager, BlackRock, surprised the investment community by submitting an application for the first Bitcoin ETF. CEO Larry Fink also expressed positivity towards the digital asset, suggesting that it could serve as a hedge against inflation and take on the role of digital gold. The market responded positively to this event, causing Bitcoin (BTC) to rise by +22% within a week. Over the following two months, the price of the digital asset consolidated within the resistance zone around $30,000 USD.
Then, in the past week, a breakout from the trading range occurred. With a correction of nearly -18% since the local peak at $31,700 USD, Bitcoin lost the gains from the BlackRock optimism. Bulls must now defend the support zone around $25,000 USD. A loss of this level would signal a temporary end to the uptrend that began since the lows of November and December 2022. Currently, the series of higher highs and lower lows remains intact.
Reasons for the Bitcoin Sell-Off?
As often happens after significant price movements, traders were seeking reasons for the sharp price decline. Some market participants attributed it to the recent insolvency filing by the Chinese real estate giant, Evergrande. Others pointed to leaked information that Elon Musk's SpaceX wrote off its Bitcoin holdings last year. While both pieces of news likely contributed to the downward pressure on the digital asset, major movements after prolonged consolidation phases are customary.
However, what undoubtedly accelerated the Bitcoin selloff was a significant number of liquidations. Within 24 hours, over $1 billion USD worth of leveraged positions were forcibly liquidated. A liquidation cascade of this magnitude was last observed during the FTX crash. Therefore, the price loss was likely a result of a combination of different factors.
Red month for altcoins
The "Risk Off" sentiment in response to the Bitcoin sell-off also affected altcoins. Only one of the top 15 coins, Shiba INU (SHIB), remained in the green over the past 30 days. The high volatility in the Dogecoin successor can be attributed to the long-anticipated launch of its own blockchain, "Shibarium." Surprisingly, most altcoins held up relatively well against Bitcoin. Ether (ETH), Dogecoin (DOGE), and Tron (TRX) performed better than the "digital gold" over the past month. The monthly losers are Litecoin (LTC) and XRP (XRP), which retraced a significant portion of their gains following the Ripple court ruling and Litecoin halving.
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Investing in cryptocurrencies, is fundamentally associated with risk. The total loss of the invested capital cannot be excluded. Cryptocurrencies are very volatile and can therefore be exposed to extreme price fluctuations in a short period of time.