Bitcoin tumbled for a fifth-straight day, putting the largest cryptocurrency on track for its worst month in more than three years and leading a full-flown retreat from digital-asset markets.
At press time, Bitcoin (BTC) was changing hands at around $37,000, after dropping to $30,000 on Wednesday. The price was down 13.76 percent in 24 hours.
Bitcoin price has dropped almost 50 percent from its ATH of $64,863
The latest crash shook out bullish leverage from cryptocurrency derivatives markets, leading to more than $8 billion in position liquidations due to margin calls.
While bitcoin has shed over 30% in the last 7 days, other top 10 coins such as ether (ETH, -34.85%), internet computer token (ICP -55.28%), Binance token (BNB 41.63%), Cardano (ADA -3.84%), XRP (-14.64%), Dogecoin (Doge -14.98%) have suffered even bigger losses, according to data source Coinmarketcap.
It was reported that the correction could soon run out of steam as technical indicators show oversold conditions. Further, the order book is flashing signs of capitulation, the point at which traders trying to enter long positions begin throwing in the towel.
“We are nearing capitulation to the downside,” crypto research firm Jarvis Labs noted in a post on Medium early Wednesday, while drawing attention to the relatively low concentration of leveraged longs at deeper price levels on Binance, the world’s largest crypto exchange by trading volume.
Capitulation is widely considered the final stage of the price sell-off.
Analysts, however, stand divided on whether the market has bottomed out. Patrick Heusser, head of trading at Swiss-based Crypto Finance AG, told CoinDesk that the market needed a correction, and prices could consolidate at lows before moving higher.
“Our desk is buying the dip,” Heusser told CoinDesk.
Stack Funds Chief Operating Officer and co-founder Matthew Dibb said the pullback to the 200-day SMA is nothing out of the ordinary and noted that a further decline to $30,000 is possible.
Bitcoin has taken a beating over the past week, falling sharply from over $50,000 to 3.5-month lows under $40,000.
“The BTC enthusiasm has been sucked out last week by the confluence of “Elon’s corporate ESG (environmental, social and governance) stamp of disapproval, the SEC’s (U..S. Securities and Exchange Commission) public un-enthusiasm for any ETF (exchange-traded fund) & the CME backwardation,” QCP Capital noted in its Telegram channel. Backwardation is when the current price of an asset is higher than its futures price.
Musk attempted to calm market nerves late Sunday with a Twitter announcement stating that the company hasn’t sold its bitcoin holdings. So far, however, that has failed to put a floor under the cryptocurrency.
According to Simon Peters, a crypto-asset analyst at multi-asset investment platform eToro, he said, “from a technical point of view, the price is finding some support from the 200-day exponential moving average, plus other momentum indicators such as the RSI, which shows that the price is somewhat oversold.”
“This means there is a possibility of buyers now stepping in to push prices up and, as we have seen before, investors waiting on the sidelines are already using the sell-off we have seen to invest in crypto assets, taking advantage of the volatility,” Peters added.
Bitcoin Reaches Highest Level Since May as Chartists Eye $50,000
After a volatile weekend, Bitcoin has once again surpassed $40,000, reaching its highest level in more than two weeks.
The world’s largest crypto gained as much as 4.5% Monday to $41,020, extending its rally to a second day. The coin has rallied roughly 9% since Friday. The wider Bloomberg Galaxy Crypto Index, which tracks some of the major cryptocurrencies, also advanced, adding as much as 7.7% at one point.
With Bitcoin crossing the $40,000 threshold, many chartists are looking at $42,500 as its next important level to breach. That number roughly represents its 200-day moving average and topping it could mean the coin rallies toward $50,000.
“Bitcoin is always going to be volatile and the manic run-up we had was never sustainable. The question is where do we settle? What is the new floor in Bitcoin?,” said Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter. “In order for Bitcoin to resume that rally, I think you’re going to need to see more widespread legitimate adoption.”
Cryptocurrencies have been under pressure in recent weeks, with Bitcoin losing about 30% since mid-April, when it hit a record of almost $65,000. The recent selloff has been exacerbated by a public rebuke from Tesla Inc.’s Elon Musk, who criticized the amount of energy used by the servers underpinning the token and reneged a previous offer to allow customers to buy his cars using the cryptocurrency. Increased Chinese regulatory oversight has also soured the mood.
But prices got a boost at the start of the week after veteran hedge fund manager Paul Tudor Jones — who said last year Bitcoin could be a good hedge against inflation — re-endorsed the coin in a television interview.
“I like Bitcoin as a portfolio diversifier,” Tudor Jones of Tudor Investment Corp. said in an interview with CNBC. “Everybody asks me what should I do with my Bitcoin? The only thing I know for certain, I want 5% in gold, 5% in Bitcoin, 5% in cash, 5% in commodities.”
Meanwhile, over the weekend, Musk once again roiled the market, saying via tweet that Tesla would allow transactions in Bitcoin once it is mined with more clean energy. The mogul said he wants miners, who have come under the spotlight in recent months, to use about 50% clean energy. The Cambridge Center for Alternative Finance has estimated that 39% of crypto mining is powered by renewable sources, mainly hydroelectric.
Bitcoin’s peers, including Bitcoin Cash, Dash, and Ether also gained on Monday.
Bitcoin Mining Difficulty Drops 5% After Xinjiang’s Miner Shutdown
Bitcoin’s mining difficulty fell by 5.3 percent on Sunday night UTC on the back of a recent drop-off in hash rate. On-chain data shows the network’s mining difficulty dropped to 19.8 trillion, a level not seen since early January.
The mining difficulty is how the network aims to keep blocks being produced at an even rate, despite a wildly fluctuating hash rate. Every two weeks it makes the mining process easier or harder, in order to accommodate the varying hash rate.
After the previous difficulty adjustment on May 30, the network’s hash rate remained steady. But on June 9, miners in Xinjiang’s Zhundong Economic and Technology Development Zone received orders to close operations — a result of the China State Council’s high-level comment about cracking down on bitcoin trading and mining activities. Following this news, major Chinese bitcoin mining pools saw a notable plunge in hash rate by over 20 percent on average.
From the last adjustment to June 9, Bitcoin’s average block production interval was around 9.9 minutes, close to the intended 10-minute-per-block interval, data shows. But due to the hash rate plunge, the average block production interval between June 9 and 14 was extended to more than 12 minutes.
The difficulty drop may be welcome news for miners who are still online as their share of the total block subsidies over the next two weeks will increase. Meanwhile, bitcoin’s price has jumped above $39,000 again, nearing the $40,000 level.
Bitcoin’s price started to see a notable breakout also around Sunday night UTC time following Tesla founder and CEO Elon Musk’s tweet denying that he manipulated the cryptocurrency’s market movements.
“This is inaccurate,” he replied to CoinTelegraph’s tweet about an article with comments that accused him of market manipulation.
“Tesla only sold ~10% of holdings to confirm BTC could be liquidated easily without moving market. When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions,” Musk said on social media.
Bitcoin’s price increased by over $1,500 within hours after Musk’s reply, which came just a month after Musk said Tesla suspended the bitcoin payment option out of environmental concerns.
Tesla Will Resume Taking Bitcoin as Payment Once Miners Go 50% Green, Musk Says
Tesla Inc (TSLA.O) Chief Executive Officer Elon Musk tweeted on Sunday that the electric carmaker will resume allowing bitcoin transactions when miners who verify transactions use more renewable energy.
Tesla will resume accepting bitcoin as payment once the cryptocurrency’s power-hungry miners go halfway green, CEO Elon Musk tweeted.
Musk halted Tesla’s months-old crypto foray in mid-May citing environmental concerns. But “when there’s confirmation of reasonable (~50%) clean energy usage by miners with the positive future trend, Tesla will resume allowing Bitcoin transactions,” he said in the tweet.
It is unclear how Musk will fact-check miners‘ clean energy usage as there is widespread debate over where the industry currently stands. Even so, the comments provide a first benchmark for reinstating bitcoin payments at Tesla.
Musk’s tweet also reiterates his defense of having sold 10 percent of the electric vehicle maker’s bitcoin stash in Q1 and would also seem to indicate the company hasn’t sold anymore.
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