Cryptocurrencies kicked off a new week with deep losses, extending weekend selling following surprisingly high U.S. inflation data and troubles for a major cryptocurrency lending platform.
Bitcoin
BTCUSD,
has slumped around 12% over the past 24 hours, last trading at levels not seen since late 2020 of around $24,228, with a low in that period of $23,822. Those represent levels not seen since late 2020. Bitcoin is down more than 60% from its November 2021 high.
Ethereum
ETHUSD,
fell more than 17% to around $1,246, hovering at an early 2021 low, after touching $1,180. Meme coin Dogecoin
DOGEUSD,
lost 17%.
Investors were reassessing exposure to perceived riskier assets in the wake of U.S. data showing persistent inflation pressures in May, with a year-over-year consumer-price index reading that was the hottest since December 1981. Crypto prices tend to be tightly correlated with the performance of U.S. stocks, and equity futures
ES00,
pointed to a bruising follow-up to Friday’s sharp losses.
Read: Bitcoin’s ‘decoupling’ from stocks? Here’s why it will, or will not happen
Also not helping sentiment were hints of industry panic. Crypto lending platform Celsius announced it was pausing all withdrawals and transfers amid “extreme market conditions,” as its CEL digital token plunged 50%. And shares of technology services group MicroStrategy
MSTR,
slumped on worries a margin call may force it to sell bitcoins.
Others were rattled by news cryptocurrency exchange Binance had “temporarily paused #Bitcoin withdrawals on the $BTC network,” due to a “stuck on-chain transaction,” the company tweeted.
Some looked at past bitcoin selloffs to judge how deep the rout may go. The co-founder and chief operating officer of crypto price-tracking company CoinGecko, Bobby Ong, warned Sunday over Twitter that even if a bottom was close, “that doesn’t mean that price can nuke 50% further.”
Others see support near the $20,000 mark.
“Since hitting a brief low of ~25,000 in mid-May, bitcoin has held up relatively well. It’s inability to hold above 30,000 however makes it difficult to defend here with little meaningful support until ~20,000,” said Jonathan Krinsky, chief market technician at BTIG, who provided this chart in a note to clients on Monday:
BTIG/Bloomberg
Also on Monday, Ong tweeted that investors should also keep an eye on stablecoin in USDD, whose price fell to around $0.97 on Monday.
Stablecoins normally aim to peg their value to the U.S. dollar or other assets. A May crisis saw stablecoins Terra and Luna lose all their value, and untold losses for investors. That turmoil also drove weakness for bitcoin and the overall crypto space.
The backer of USDD is the TRON DAO, one of the largest decentralized organizations, and its own cryptocurrency TRX was down about 17% over the last 24 hours. The TRON DAO announced Monday that it would use $2 billion to fight short sellers of TRX, but Tron’s founder Justin Sun tweeted that this may be futile.
“Funding rate of shorting #TRX on @binance is negative 500% APR. @trondaoreserve will deploy 2 billion USD to fight them. I don’t think they can last for even 24 hours. Short squeeze is coming,” he said. Read more on that here.
CEO of Euro Pacific Capital and chairman of SchiffGold, Peter Schiff, who has been a longtime critic of cryptocurrencies, tweeted that total market cap of cryptocurrencies is now under $1 trillion, a warning sign for investors.