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Bitcoin breaks below $60 000 as ETF-related bliss evaporates

‘Bitcoin needs to cool off before it embarks on its next leg up’ – co-founder of Nexo.
Image: AdobeStock

Bitcoin slid below $60,000 as euphoria over the first U.S. crypto ETF dissipated and traders took profits following a record-breaking rally.

The biggest digital asset by market value fell as much as 6.4% to $58,132, reaching the lowest intraday price in almost two weeks. It climbed to $66,976 on Oct. 20. Ether also sank about 6% and smaller tokens took a hit, with Dash and EOS each tumbling more than 10%. The Bloomberg Galaxy Crypto Index, which tracks some of the largest digital coins, fell 5.3% at one point.

“I’m not surprised Bitcoin hit a wall at $67,000, having passed the April high, given the speed of the move from $30,000 in July,” said Antoni Trenchev, managing partner and co-founder of Nexo, a crypto lender. “Bitcoin needs to cool off before it embarks on its next leg up.”

Analysts said speculators are cutting back on positions as the launch of the first U.S. Bitcoin exchange-traded fund fanned enthusiasm and pushed prices to new all-time highs. Total liquidations of long crypto positions topped $700 million on Wednesday, the most since Sept. 20, according to data from

“The market has been leveraged long for a few weeks, so there has been that overhang in positioning,” said Jonathan Cheesman, head of over-the-counter and institutional sales at crypto-derivatives exchange FTX.

Stephane Ouellette, chief executive and co-founder of FRNT Financial Inc., a crypto-focused capital-markets platform, said some of the elation around the ETFs has vanished and the selloff’s been exacerbated by the fact that there is much more leverage available in crypto for retail traders globally than there is in other asset classes.

“We already saw a wave of quite severe leverage come into the space which was evidenced by futures contangos, perpetual swap and peer-to-peer lending rates all spiking around the launch of the BTC ETF,” Ouellette said. “In the last few weeks, for example, we saw monthly and quarterly BTC futures contangos in the 20-to-30% range. While leverage can in some cases get even more extreme, the activity over the last few days has some tell-tale signs of a typical crypto check-back.”

Ouellette cited December BTC futures contango overnight dropping to 13.5% from around 20% annualized on the FTX cryptocurrency derivatives exchange.

Bitcoin also broke below its 20-day moving average, a technical move that could invite more selling. Nexo’s Trenchev, meanwhile, says there’s a clear head-and-shoulders pattern present, with $60,000 being a key level.

“Bitcoin broke below that to $58,000,” he said. “Let’s see if it bounces back. Otherwise keep an eye on $52k or $53k as possible destinations.”

The ProShares Bitcoin Strategy ETF, or ticker BITO, accumulated more than $1 billion in assets in just days after its launch last week. For crypto fans, their premieres marked a watershed moment because they signify further mainstream acceptance and allow investors to buy into an investment vehicle that is readily available to a wider pool of people.

“The price slump is being fueled by sellers, who appear to be acting simultaneously in taking profits on their investment,” said Petr Kozyakov, co-founder and CEO of the global payments network Mercuryo. “The price correction is an organic one and was not triggered by a clear-cut fundamental.”

© 2021 Bloomberg L.P.



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Just a healthy correction on its way upwards….

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