By Omkar Godbole (All times ET unless indicated otherwise)
It’s another risk-off session across the crypto markets. Bitcoin (BTC) slid 3.5% in the past 24 hours to approach October lows around $103,600. Any further and the largest cryptocurrency would be at its lowest price since June.
The CoinDesk 20 Index is down 5%, with major altcoins like ether (SOL) and solana (SOL) also hitting their lowest since August.
The usual culprits are taking the blame: hawkish comments from Fed Chair Jerome Powell; a strengthening dollar index; persistent selling from long-time wallets.
“Liquidity is expanding globally, yet capital isn’t reaching crypto,” market maker Wintermute said. “ETF inflows have stalled, DAT activity has dried up, and only stablecoins are still growing.”
But there’s another angle, and it’s one worth considering. The bearish tone could be tied to the Oct. 17 flash crash, when several arbitrage bets lost money on their futures legs due to auto-deleveraging. These firms could be quietly liquidating their remaining long spot positions, adding to downward pressure on prices.
Speaking of the market swoon, Stream Finance’s stablecoin, xUSD, collapsed 80% to 30 cents, with the DeFi firm reporting a $93 million loss stemming from an external fund manager. Stream Finance said it hired a top legal firm, Perkins Coie LLP, to investigate the issue, and the crypto community is on edge, assessing the broader market fallout.
Some observers have noted that lenders of xUSD are now earning over 500% daily interest. That’s a clear indication the protocol’s treasury might be in serious trouble.
Amidst all this gloom, some privacy coins, such as Zcash, Decred and DASH, are surging, adding as much as 200% in just 24 hours. It appears that traders are seeking refuge wherever they can.
In traditional markets, the recent surge in credit default swaps tied to Oracle is being taken to represent investor angst over the company’s booming AI-related spending. The dollar index has risen to 100 for the first time in months, complicating matters for bitcoin bulls. Gold, meanwhile, continues to hold steady around $4,000 per ounce. Stay alert!
What to Watch
For a more comprehensive list of events this week, see CoinDesk’s “Crypto Week Ahead”.
