Bitcoin, the most valuable cryptocurrency by market capitalization, fell more than 7% on Monday, reaching its lowest level since July, as fears of a Russian attack on Ukraine prompted a sell-off of riskier assets. Bitcoin was last trading down 6.8 percent at $33,820, extending losses from its all-time high of $69,000 set in November to more than 50%.
Ethereum fell 11% to its lowest level since July 29. It was the last trading at $2,253.
Smaller cryptocurrencies, which tend to move in lockstep with bitcoin, have also fallen. Riot Blockchain, Marathon Digital, and Bit Digital fell between 7.3 and 12 percent in premarket trading, while crypto exchange Coinbase Global fell 7.8 percent.
The total cryptocurrency market cap is now $1.83 trillion, down from $2.93 trillion on November 8. It has dropped by more than 7% in the last day. No coin or token in the top 20 by market capitalization (excluding stablecoins) has posted a weekly gain; the majority has posted double-digit losses.
However, things are bad everywhere, with equities markets also having a rough start to the year, owing to a combination of high inflation, COVID-linked worker and supply shortages, and impending interest rate hikes. The Dow Jones Industrial Average fell nearly 0.9 percent in Thursday trading, bringing its year-to-date losses to 4.5 percent. The NASDAQ, which is heavily weighted toward technology, is faring worse. It is down nearly 10% for the year after losing 1.3 percent on Thursday.
Bitcoin, as crypto enthusiasts will tell you, never sleeps. The stock markets in the United States have the advantage of being closed this weekend. But it might want to take a break from this brutal January.
Experts analyzing the downfall
Cryptocurrencies have plummeted on the prospect of a reduction in the Federal Reserve stimulus that has kept speculative assets afloat during the pandemic. Since a November high, more than $1 trillion has been erased from digital coins. Bitcoin dropped 2.5 percent to $34,614 at 5:21 p.m. in Hong Kong.
Pepperstone Financial Pty Ltd.’s Chris Weston, the head of research, stated that the sector is “grossly oversold, but momentum is to the downside and rallies are likely to be sold.”
The chief global strategist at BCA Research Inc., Peter Berezin, is skeptical of Bitcoin in general, though he sees a short-term boost if stocks recover. His long-term goal for it is only $5,000. Investors looking to hedge risk should consider buying Cardano, Solana, and Polkadot in addition to Bitcoin, Litecoin, and Ethereum.
The Bitcoin Fear & Greed Index
The Bitcoin Fear & Greed Index was 11/100 on January 23. While the Index remains above January 8’s low of 10/100, it has retreated from the current month’s high of 24/100.
Back in November, the Index rose to 84/100 on November 9 before reversing. A return to 30/100 and into the orange was required to reflect any shift in sentiment. The Index is currently in the red, reflecting the market’s bearishness.
The NASDAQ fell 7.55 percent last week, putting it in the corrective territory. A bullish start to the week for the NASDAQ would relieve Bitcoin and the broader market.
Professionals accuse OpenSea and NFT issuers of Ethereum price collision
The volume of Ethereum leaving OpenSea, a peer-to-peer NFT marketplace, has steadily increased over the last two weeks. 21,000 Ethereum were directly transferred from OpenSea’s wallet to Coinbase.
As the sale of NFTs increases, so do royalties and direct transfers from OpenSea. The meteoric rise of the NFT marketplace may increase Ethereum inflows to exchanges such as Coinbase.
As for royalties from OpenSea, an additional 35,300 Ethereum were distributed to NFT issuers. Colin Wu, a Chinese journalist and crypto enthusiast, believes that the surge in Ethereum inflows from OpenSea to Coinbase fueled the increase in selling pressure.
Historically, an increase in selling pressure causes the altcoin’s price to fall. Analysts have noted that the net outflow for Ethereum in 2021 was relatively high. The net inflow of Ethereum has increased significantly over the last month. @IAmCryptoWolf, a pseudonymous cryptocurrency analyst, assessed the Ethereum price trend and forecasted that a bounce in the altcoin’s price near $2,300 would act as strong resistance.
Increased altcoin inflows to cryptocurrency exchanges fueled Ethereum’s recent price drop. Experts attribute the decline in Ethereum’s price to direct transfers from the NFT marketplace OpenSea.
The Bottom Line
Bitcoin was down 0.93 percent to $35,969 at the time of writing. A move through this week’s pivot of $37,918 would be required to bring $40,000 levels back into play in the coming week. However, unless there is a prolonged crypto rally, Bitcoin is likely to fall short of last week’s high of $43,591. The first significant resistance level, at $41,981, would almost certainly limit the upside.