[NEW YORK] Cryptocurrencies remained under pressure on Monday (Nov 3), with Bitcoin trading near US$107,000 and altcoins struggling even more, three weeks after a historic liquidation event shook the asset class and wiped out billions of US dollars in leveraged positions.
This comes as, for the first time in seven months, institutional demand for Bitcoin has also slipped below the rate at which new coins are being mined, according to Charles Edwards, founder of Capriole Investments. While this move suggests that large buyers may be pulling back, other activity shows a risk-off attitude across the crypto market as a whole.
A MarketVector index tracking the bottom half of the largest 100 digital assets fell for a third consecutive trading session, dropping as much as 8.8 per cent with some tokens retesting the lows seen during the October flash crash. The index is down around 60 per cent this year.
Bitcoin slipped as much as 4.3 per cent on Monday to around US$105,300, and is still about 14 per cent higher since December. Even so, Bitcoin has lagged global equities in recent weeks as investors rotate towards risk assets more sensitive to macroeconomic developments, leaving crypto struggling to find its footing despite a broadly positive global backdrop.
Elsewhere, Ton, a digital asset from a blockchain project that was initially linked to Telegram Messenger, fell around 10 per cent. Last week, the digital asset treasury firm TON Strategy revealed that it received a warning from Nasdaq that it failed to comply with shareholder approval requirements. The DAT’s stock fell 4 per cent on Monday, and is down 37 per cent this year.
The October event wiped out roughly US$19 billion in long positions and market participants say rebuilding that capital base takes time. In this, experts say sentiment remains cautious as investors wait for confirmation that prices have found a low point.
“The market will have to first show that a convincing bottom in price is near before making a fresh attempt at breaking upwards,” said Jordi Alexander, CEO at crypto trading and market making firm Selini Capital.
He added that the crypto market is in a “hangover phase” from October’s liquidation shock. While many point to October as an inflection point for crypto market volatility, others still see soft prices across the asset class as a mystery.
“I view this as somewhat of a puzzling correction,” said Matthew Kimmel, a digital asset analyst at CoinShares. While Kimmel believes that the crypto market is “still experiencing some reverberations” from the liquidation event, he highlighted indicators in Bitcoin supply through noting the movements of previously stagnant wallets in the coin’s open transaction records.
“Those coins have been moving, likely coming back onto the market, providing some sale pressure, investors taking profit,” Kimmel added. “That’s something I’m continuing to monitor.”
This is why prices are trending lower, said Jake Hanley, a managing director at Teucrium ETFs, who noted that the current technical picture shows a bifurcated market.
“Prices have been trending lower, topping out with Bitcoin since the summertime and certainly trending lower in XRP since mid-summer,” he said. “As that’s been happening, this price is just telling you that folks are taking profits.” BLOOMBERG
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