You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App

NEW SENS search and JSE share prices

More about the app

Bitcoin gets swept up in global selloff

As stocks stumble.

Cryptocurrency prices slumped as a broad selloff sparked by worries about contagion from China Evergrande Group swept through global markets.

Bitcoin was down 7.4% to trade around $44,061 as of 1:58 p.m. in New York. It had dropped as much as as 10.7% earlier, which pushed it below $43,000 and to its lowest level since the beginning of August. Other digital assets also retreated, with Bitcoin Cash, EOS and Ether all declining.

The losses mirrored the action in the broader market as investors weighed the risks coming from Evergrande’s debt woes and this week’s Federal Reserve meeting. The S&P 500 fell about 2.5% at one point in its worst session since January, while European equities tumbled the most in more than two months.


“Some have attributed the sudden dip to the currently ongoing Evergrande situation in China which has already caused turmoil in traditional markets,” wrote Jonas Luethy, a sales trader at GlobalBlock, the U.K.-based digital asset broker. “Analysts have suggested a choppy week is ahead, with a potential pullback to as low as $41,000.”

The swiftness of the plunge was likely accelerated as more than 258,000 traders had their accounts liquidated over the past 24 hours, equal to around $1.27 billion worth of crypto, according to data from Bybt, a crypto futures trading and information platform.

“This is part of a well-established pattern where it sells off as traders cash in their riskier assets to cover margin calls and/or sit on the sidelines until markets calm down and they feel more comfortable going back into riskier positions,” said Leah Wald, CEO at Valkyrie Investments.

Chartists say Bitcoin could test its 100-day moving average, which currently sits around $40,655. Should it fall to that level, it could find support at $40,000. Still, other signals show it could be in for a reprieve: the coin fell below the lower limit on the Trading Envelope indicator, suggesting it dropped too far, too fast. And its 14-day Relative Strength Index (RSI) at 39 shows it’s creeping toward oversold levels.

Although Bitcoin doesn’t always trade in tandem with financial markets — a characteristic that made it a tempting proposition from a portfolio-diversification point of view — its correlation on a 30-day basis to futures on the Nasdaq 100 has been consistently positive since February last year. A reading of 0.5 — which it’s close to now — means they’re moving in the same direction quite often these days.

Investors say that while a link with tech stocks make sense — both types of investments may be thought of as appealing to the same tech-savvy investor pool — strong correlations are also showing up for small-cap stocks and the S&P 500. That’s probably because as Bitcoin becomes more integrated in global financial markets, it should respond more to the changes in risk appetite that drives global sentiment.

Meanwhile, El Salvador’s President Nayib Bukele said the country had “bought the dip,” in Bitcoin, adding 150 tokens to raise its total holdings to 700 — about $32 million based on current pricing. The nation recently adopted Bitcoin as legal tender in a controversial move that met with technical glitches and protests.

“Not everyone is selling,” said Valkyrie’s Wald.

COMMENTS   1

You must be signed in to comment.

SIGN IN SIGN UP

Crypto = it’s daily movements is merely a function of human psychology / fear & greed and determined by human sentiment. That’s all there is to it.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

Podcasts

INSIDER SUBSCRIPTIONS APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING PORTFOLIO TOOL CPD HUB

Follow us:

Search Articles:
Click a Company: