TL;DR Breakdown
- Is this the start of a bear market or another crypto winter as Bitcoin falls below $26K for the first time in 2 months?
- The SEC’s delay in approving a BTC ETF has brought uncertainty to the broader market.
- BTC price drop has triggered nearly $1 million in liquidations across the entire crypto market.
Description
After several days of declining prices, Bitcoin (BTC) fell 9% in less than 10 minutes to temporarily dip below $26,000. According to CoinGecko, the BTC price was hovering around $27,600 at 9:30 p.m. UTC on August 17 before falling more than 8% to $25,320 at the time of writing. According to reports, Bitcoin fell on … Read more
After several days of declining prices, Bitcoin (BTC) fell 9% in less than 10 minutes to temporarily dip below $26,000. According to CoinGecko, the BTC price was hovering around $27,600 at 9:30 p.m. UTC on August 17 before falling more than 8% to $25,320 at the time of writing.
According to reports, Bitcoin fell on Thursday and momentarily dipped below $25,000 on Binance, the world’s largest crypto exchange, as Wall Street has become more risk-averse and August had been relatively uneventful.
Bitcoin falls to %25k – Here’s why
The Bitcoin Index reached its lowest point in two months. Ether (ETH) performed no better, falling 11% to approximately $1,600.
The Binance Coin (BNB) token, which is associated with the exchange where selling pressure was particularly intense, declined by nearly 7%.
Global interest rates continue to rise, particularly in the United States, where the 30-year Treasury bond rose to 4.42 percent, its highest level since 2011, according to Bloomberg. At 4.32, the 10-year yield is just one basis point away from a 15-year high.
This has contributed to a decline in the prices of crypto assets and risk assets in general. Despite maintaining its level today, the Nasdaq is approximately 6% lower for the month of August.
According to one market analyst, rising bond yields indicate a deteriorating equity investment case. Higher discount rates reduce cash flow valuations, and the equity risk premium has dropped to 2007 levels as a result of tighter credit.
Higher bond yields imply a weaker investment case for non-yielding assets like Bitcoin and bullion. No matter how compelling the case for physical assets may be, yield is yield, and Bitcoin and gold have none.
While bitcoin enthusiasts have expressed optimism that the SEC will soon approve a spot bitcoin ETF, there is no assurance that the SEC will make a decision on any of the numerous pending applications in 2023, let alone grant approval.
A favorable court decision for Grayscale, the owner of the Grayscale Bitcoin Trust (GBTC), in its lawsuit against the SEC to force approval of its effort to convert the trust into an ETF could be another positive catalyst. Observers had hoped for a ruling on Tuesday, but that date has passed, and they are now looking at Friday as a possibility.
BTC price crash triggers liquidations
The drop in BTC price resulted in roughly $1 million in liquidations throughout the entire crypto market. The last time Bitcoin dropped this low was in mid-June, just after Binance and Coinbase were sued by the Securities and Exchange Commission (SEC) and before BlackRock launched its bid for a Bitcoin spot ETF.
Over $788 million in liquidations have occurred in the last 24 hours, according to Coinglass, with over $812 million taking place in the last hour alone. Approximately half of the liquidations were on Bitcoin trades, with the remaining $245 million on Ethereum trades.
The greatest single liquidation on Binance happened on an ETH-BUSD trade, clearing out a trader for a whopping $55.92 million. There were about 164,000 liquidations in all.
The announcement comes only hours after the Wall Street Journal reported that Elon Musk’s SpaceX had liquidated the balance of its Bitcoin holdings, reducing its worth from the previous year by $373 million.
The present crypto market sentiment
Furthermore, the crypto market has been oblivious to recent good crypto-specific developments such as PayPal, one of the world’s top financial services organizations, launching a stablecoin and a number of applications for futures-based exchange-traded funds (ETFs) linked to ether (ETH).
Bitcoin’s renewed negative volatility is consistent with the meme coin SHIB’s track record of placing interim tops following big rallies. The self-proclaimed dogecoin-killer gained more than 20% in the first 12 days of the month, owing primarily to hopes that a layer 2 Shibarium launch would help the cryptocurrency rebrand itself as a genuine industry participant.
Since August 12, the crypto has dropped 18%, with values plunging 9% in the last 24 hours alone due to Shibarium’s volatile start. According to data source Coinglass, funding rates in SHIB perpetual futures trading on Binance have dropped to a two-month low of -0.084%.
The negative figure implies that shorts are paying longs to keep their bearish positions open. In other words, leverage is skewed bearish.
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