Market Wrap: Bitcoin Briefly Drops Close to $28K as Ether Futures Heat Up

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Overfunded Bitcoin investors in the derivatives market led to the sell-off on Monday, while the ether spot and futures markets have attracted increasing attention.

  • Bitcoin (BTC) starts trading at $ 31,444 as of 9:00 PM UTC (4:00 PM ET). 5.7% less than in the last 24 hours.
  • Bitcoin’s 24-hour range: $ 28,154 to $ 33,562 (CoinDesk 20)
  • BTC slightly below its 10-hour moving average and well below the 50-hour moving average on the hourly chart, a bearish signal for market technicians.

Bitcoin trading on Bitstamp since January 1st.

Source: TradingView

Bitcoin price fell on Monday due to strong selling pressure. Around 10:00 UTC (5:00 a.m. CET), spot exchanges such as Coinbase recorded an above-average number of traders who sold with a volume of 6,000 BTC on the exchange during that hour. According to CoinDesk 20 data, prices fell to $ 28,154.

Continue reading: Bitcoin suddenly drops 13% while altcoins keep rising

“A lot of people are now taking profits after rapid price growth,” said Constatin Kogan, managing partner of the crypto investment firm Wave Financial. According to CoinDesk 20 data, Bitcoin exceeded $ 34,000 and hit a record high of $ 34,366 on Jan. 2. Analysts see many investors make some gains after such a rapid surge.

Historical Bitcoin price for the last week.

Source: CoinDesk 20

“Over the weekend as bitcoin prices hit new highs, markets hit new levels of resistance,” said Jason Lau, chief operating officer of the San Francisco-based exchange OKCoin. “Profit-taking has been around these levels, creating sideways trading and leading many to long been leveraged on futures.”

During the period at 10:00 UTC (5:00 a.m.CET), when the sale on Monday was above normal, liquidations of USD 10 million were carried out on the BitMEX derivatives exchange. This crypto is comparable to a margin call for over-leveraged bullish bets.

Bitcoin liquidations on BitMEX derivatives in the last 24 hours.

Source: Skew

In total, BitMEX had sales liquidations of $ 135 million last day, which far outweighed the $ 34 million buy liquidations at traders who were running low. This indicates some exhaustion in the hyper-bullish market until Monday.

Even so, Lau still expects buying pressure to keep the Bitcoin price high. “These dips are being bought up pretty quickly, which confirms the statement that there are offers from institutions that want to access Bitcoin,” he told CoinDesk.

Some profit-taking is likely to transition from Bitcoin to Ether. Aether has exploded since Jan 3rd and is now up 38.5% in 2021, while the price per 1 BTC has so far increased 7.5% in 2021.

Previous price development of Bitcoin (gold) against ether (blue) in 2021.

Source: TradingView

“Traders have been converting assets from BTC to alts for higher returns,” said Lau, who calls ether one of the “alts,” or alternative cryptocurrencies. “This is obvious as [ether] gained via Bitcoin in the last 24 hours. “

Wave Financial’s Kogan sees this rotation from Bitcoin to other crypto assets as a volatile condition. “Another interesting factor now is the old season, so that demand is slowly switching to other crypto assets. But in my opinion this is only temporary. “

Ether Interest Futures Open Interest Crests $ 2.6 billion

The second largest cryptocurrency by market capitalization, Ether (ETH), rose $ 1,034 on Monday and rose 10.4% in 24 hours at 9:00 PM UTC (4:00 PM ET).

Continue reading: The price of Ether tops $ 1,150, hitting its highest level since January 2018

The ether futures market hit a new record high on Sunday at $ 2.6 billion in open interest (OI). At OI, Binance leads the way with $ 632 million, followed by OKEx with $ 421 million and Huobi in third place with $ 382 million.

Open interest in various locations for ether futures for the past six months.

Source: Skew

According to John Willock, CEO of Crypto Asset Manager Tritum, the interest of the futures in ether is increasing because savvy investors want to start hedging a high price level for ether. “There is a strong natural bias for some long-term ETH traders to finally sell at the numerically significant $ 1,000 threshold where we’ve seen a lot of limit orders on exchange books waiting to be filled,” said Willock opposite CoinDesk.

He also said that institutional interest in Aether is growing as CME is expected to launch Aether futures next month and investors are currently looking for a way to get into the Aether futures market. “Institutions can put brief pressure on these markets as many people expect a short-term price correction after this monumental and rapid surge in blue-chip crypto instruments,” added Willock.

Other markets

Digital assets on CoinDesk 20 are mostly green Mondays. Notable Winners as of 9:00 PM UTC (4:00 PM ET):

Continue reading: The Ukrainian government selects Stellar to help build the national digital currency

  • Oil was down 1.8%. Price per barrel of West Texas Intermediate Crude: $ 47.30.
  • Gold was in the green at 2.4% and at $ 1,943 at press time.
  • The 10-year US Treasury yield rose slightly to 0.920 on Monday and in the green to 0.17%.

The CoinDesk 20: The assets that matter most to the market