Selling pressure intensified in both cryptocurrencies and equities on Monday as investors continue to reduce their exposure to speculative assets.
Bitcoin (BTC) fell towards $30,000 for the first time since last July, with technical indicators showing support between $27,000 and $30,000, the lower end of a year-long price range. Still, the negative momentum on daily, weekly, and monthly charts means BTC is at risk of further declines, similar to what happened during the 2018 crypto bear market.
Most alternative cryptocurrencies (altcoins) underperformed Bitcoin on Monday, which is typically the case in a down market. For example, Polkadot's DOT token, Decentraland's MANA token, and Dogecoin's DOGE fell more than 17% in the last 24 hours, while BTC dropped 11% in the same period.
Just launched! Please sign up for our daily Market Wrap newsletter, which explains what's happening in the crypto markets - and why.
Meanwhile, the S&P 500 hit new lows for the year as tech stocks continued to underperform.
The Chicago Board Options Exchange's CBOE Volatility Index (VIX), a popular measure of stock market volatility expectations based on S&P 500 index options, has risen in recent months, reversing its downward trend from March 2020 highs. This means that further price fluctuations are likely, which usually forces traders to hedge against downside risks.
Latest prices
●Bitcoin (BTC): $31,302, -9.48%.
Ether (ETH): $2,297, -10.28%
●S&P 500 daily close: $3.991, -3.20%
●Gold: $1,853 per troy ounce, -1.51%
●Ten-year Treasury yield daily close: 3.08%.
Bitcoin, ether, and gold prices are determined at approximately 4 p.m. New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information on the CoinDesk indices can be found at coindesk.com/indices.
No Surrender YetDerbitcoin
Fear & Greed Index is at its lowest level since Jan. 24, when the bitcoin price hit a temporary low around $32,900
.The index remained in the "extreme fear" range last month as traders grappled with macroeconomic and geopolitical risks. Still, the index may remain in the "fear" zone for a few months before prices start to rise. In 2018, for example, the index moved erratically between the "fear" and "greed" levels for a full year before the BTC price exited a bear market phase.
By comparison, BTC saw an 80% decline from peak to trough in 2018, compared to the current 50% decline from its all-time high at $69,000 last November.
Other market indicators show no signs of capitulation among sellers yet. For example, while bitcoin volume has increased over the past 24 hours, it is still below its January 24 peak, according to CoinDesk data.
In addition, short-term Bitcoin holders continue to dominate selling behavior. However, according to blockchain data analyzed by CryptoQuant, the volume of BTC sales is not as extreme as it was earlier in the year.
So far, El Salvador has bought the price dip that previously occurred during major price drops last year.
Realized Bitcoin Price at $24SomeAnalysts
expectBTC to eventually stabilize at a lower price level, with some estimates ranging from $24,000 to $27,000
.The chart below shows the average realized price (average cost basis among traders) at $24,300. Historically, realized prices have marked lows preceding long trading ranges or a strong uptrend.
Glassnode's data also compares the market price of BTC to its realized price (MVRV ratio), which does not indicate capitulation. However, a move towards $24,000 could push the MVRV ratio into oversold territory.
From a technical perspective, BTC confirmed a break below $40,000 last week, which could mean an initial downside target towards $27,200, according to Katie Stockton, Managing Partner at Fairlead Strategies.
Altcoin Overview
- Trouble in Terra land: UST, Terra Blockchain's stablecoin, has lost its dollar peg twice in the last 48 hours, falling as low as $0.98 on Monday. UST is the largest algorithmic stablecoin with a market cap of $18 billion and uses the LUNA token to absorb any price deviation from the $1 peg. However, critics say UST's design is inherently flawed and vulnerable to attack. Following the removal of the peg, LUNA fell sharply to $51.3, a 50% drop in the last month. Read more here.
- DeFi tokens fall: The locked value of decentralized financial protocols (DeFi) fell to a one-year low when it lost about $27 billion last weekend. Curve, a stablecoin swap platform and the largest DeFi protocol by total value of locked tokens (TVL), lost nearly 10% of its value last week, while Lido, the largest staking service, saw a 13% drop and Terra's Anchor fell 21%. The decline is likely due to falling token prices and risk appetite in the broader market. Read more here.
- S&P rates Compound: The corporate arm of decentralized finance platform Compound, Compound Treasury, received a B- rating from coveted ratings agency S&P Global. It appears to be the first time an "institutional DeFi" product has been rated by one of the major rating agencies, and Compound Treasury's Reid Cuming said it is a sign that institutional investor interest in DeFi is growing. Read more here.
Relevant Insights
- Bitcoin plunges to lowest price since July 2021 as market panic mounts: Cryptocurrencies tumbled across the board over the weekend and added to their losses Monday morning as global stock markets swooned.
- UST Stablecoin Falls Below Dollar Level for Second Time in 48 Hours: The development comes after the Luna Foundation Guard announced that its massive bitcoin reserves will be used to defend the UST's dollar peg.
- Mark Zuckerberg says Instagram will test NFTs starting this week: Meta (FB) is also working on 3D Augmented Reality Non-Fungible Tokens that will be compatible with Instagram Stories.
- Luna Foundation Guard Borrows $1.5B in BTC and UST for Stablecoin Peg: The move comes after UST briefly lost its peg to the US dollar over the weekend.
- Bitcoin funds had surprising inflows as markets crashed: About $45 million flowed into these funds in the week ending May 6. Investors apparently bought the market weakness.
- The Bahamas' "sand dollar" needs enhanced cybersecurity, the IMF said: the central bank's digital currency accounts for only a tiny fraction of the available currency in the Caribbean country, the international organization said.
Other MarketsMostdigital
assets in the CoinDesk 20 ended the day lower
.Biggest winnersThere
are no winners in CoinDesk 20 today.Biggest losers
| Asset | Ticker | Income | DACS Sector |
|---|---|---|---|
| Polkadot | DOT | -16.0% | Smart contracts platform |
| Litecoin | LTC | -15.1% | Currency |
| Cardano | ADA | -15.0% | Smart contracts platform |
Sector classifications are provided through the Digital Asset Classification Standard (DACS), which was developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.