Max E.Mon, Jan 24, 2022 5:55 PM
Bitcoin (BTC): 24 January Price Digest
The past weekend turned into a “cryptocurrency carnage” for the market, as a result of which BTC fell by 50% compared to the all-time high of $69,000 recorded just 2 months ago.
Friday's BTC sell-off, which began during the trading session in the Asian region, refused to stop and continued over the weekend, causing the entire crypto market to collapse. ETH fell to the $2,300 mark, and most large and medium-sized cryptocurrencies suffered losses of 30-40% on average.
On Monday, January 24, the price of Bitcoin continued to fall and reached levels near $ 33,000 – this is the lowest value in the last six months. Over the past day, the asset has fallen in price by 7.13%, over the week – by 22.04%. At the time of writing, Bitcoin price was $33,250.28.
The largest altcoins Ethereum (ETH) and Binance Coin (BNB) lost about 10% in value and fell to $2242 and $344 respectively.
Of the top 10 altcoins, Solana (SOL) suffered the most losses, its rate fell by almost 18% over the past day to $84. The value of all digital currencies fell to $1.536 trillion.
Shares of American mining companies Riot Blockchain, Marathon Digital and Bit Digital fell by 7-12%. The capitalization of the Coinbase exchange has decreased by more than 8%.
The immediate future of the crypto market looks bleak, especially given the macroeconomic conditions and the climate. Risk assets are being dumped by Asian and European traders as international tensions escalate. In addition, the authorities of several countries, including Russia and Spain, last week not only confirmed their tough stance towards the industry but also announced new measures to limit the dissemination of information about cryptocurrencies and access to such tools.
But the main factor in the price drop of cryptocurrencies is the monetary policy of the United States. The US Federal Reserve is expected to respond to high inflation by raising interest rates: the regulator announced three increases planned for 2022.
High-interest rates are an extremely negative factor for high-risk investments, which, among other things, include cryptocurrencies. The reason is that rising rates increase the attractiveness of other types of investments, as well as reduce the liquidity of the financial market.
However, all is not lost, as can be seen from the intranet data. First, most of the long-term holders of BTC are calm and do not react in any way to the recent shake-up. Secondly, the net trading volume of BTC on exchanges has again gone into the “red values”, which means that it can be assumed that more and more coins are withdrawn by holders from exchanges and put into cold wallets during an unstable situation.
Futures are another indicator of market trends. As a result of BTC falling below $35,000, there was a massive liquidation of leveraged positions worth $2 billion. Judging by historical patterns, a local bottom is often accompanied by negative funding rates. Until the recent collapse, however, funding rates remained at their normal levels. Thus, the events over the weekend are a reminder of the crypto market's tendency towards excessive volatility, which also refutes the speculation that the crypto market is moving in a bearish direction. The market is still in limbo, waiting for clearer macro signals.