Bitcoin has suffered two straight days of selling, bringing the price close to below $31,000. Also, ether funding rates for leveraged positions are cooling after a very heated few weeks.
- Bitcoin (BTC) trading around $31,850 as of 21:00 UTC (4 p.m. ET). Slipping 8.9% over the previous 24 hours.
- Bitcoinâ€™s 24-hour range: $31,006-$35,656 (CoinDesk 20)
- BTC slightly above the 10-hour moving averages but well below the 50-hour on the hourly chart, a sideways-to-bearish signal for market technicians.
The price of bitcoin is in the second day of a major sell-off, with the worldâ€™s oldest cryptocurrency bottoming out Thursday around 14:30 UTC (9 a.m. ET) at $31,006, according to CoinDesk 20 data. Bitcoin has gained somewhat since then, changing hands at $31,850 as of press time.Â
Rupert Douglas, head of institutional sales at crypto custody provider Koine, said bitcoinâ€™s drop this week comes after a month when fresh all-time highs were crossed several times. â€œItâ€™s been quite a run,â€� Douglas told CoinDesk. â€œI think weâ€™re due a pullback after the recent pump.â€�
The current all-time high for bitcoinâ€™s price, set on Jan. 8, is $41,962, according to CoinDesk 20 data. In the couple of weeks after that record â€“ to Thursdayâ€™s low â€“ bitcoin fell by over 26%.
Katie Stockton, technical analyst at Fairlead Strategies, continues to see support at $25,000 where she sees traders planning to scoop up some of the asset and push price back up.Â
â€œYes, bitcoin is extending its pullback,â€� Stockton said. â€œThe $25,000 level would be a natural level for buyers to show interest.â€�Â
Volatility for bitcoin has been rising. Data from Wednesdayâ€™s close shows bitcoinâ€™s 30-day volatility is trending upward again. It was at 88.7% on Jan. 20, a level not seen since April 2020 when the coronavirus created uncertainty for all markets across the board, including cryptocurrencies.
Stockton expects bitcoinâ€™s gyrations to continue for a while. â€œMy short-term overbought/oversold measures support another couple weeks of downside volatility, after which we would look for support discovery.â€�
News stories are beginning to detail bearish signals in the crypto market, including one on the nominee for Treasury Secretary in the Biden administration, according to Jason Lau, chief operating officer for San Francisco-based exchange OKCoin. â€œComments from Janet Yellen about curtailing crypto was another negative headline,â€� Lau told CoinDesk.Â
In addition, Wednesdayâ€™s bitcoin volumes are shaping up to be the weakest they have been in the past month. Daily volume on the eight exchanges tracked on the CoinDesk 20 were at $860 million as of press time, a paltry showing compared to the past monthâ€™s $4.3 billion average.
OKCoinâ€™s Lau is seeing a lot of selling in the market, with Asia particularly bearish, he told CoinDesk. Yet, institutional investors in the U.S. are still grabbing some bitcoin, which is a bright spot to consider.Â
â€œOver the past few weeks we have seen a strong and consistent selling during Asian trading hours, while new capital from North America has constantly bought the dips during their trading hours,â€� Lau said. â€œAsian traders look to be taking profits with price increases, while American investors, mostly institutions, continue to engage in crypto markets and accumulate positions.â€�
Ether swaps funding comes back to earth
The second-largest cryptocurrency by market capitalization, ether (ETH), was down Thursday, trading around $1,206 and falling 9.6% in 24 hours as of 21:00 UTC (4:00 p.m. ET).
After some ether perpetual swaps funding rates were coming in at lofty levels in January, including BitMEX offering a whopping 0.6%+ rate Jan. 4., the numbers are now converging towards zero on the spot price drop.
The funding rates are for liquidity providers to offer leverage to traders to go long or short. Thus when funding rates were high, it meant traders were paying a premium to go long. Itâ€™s much lower now.Â
Vishal Shah, founder of derivatives exchange Alpha5, says etherâ€™s previously incredibly high funding rates proves an all-time high of $1,439 per 1 ETH was the result of an overheated market. â€œIâ€™ve only had a peripheral look, but Iâ€™d say the cost of leverage was simply too high,â€� Shah told CoinDesk.
Digital assets on the CoinDesk 20 are almost all red Thursday. The notable winner as of 21:00 UTC (4:00 p.m. ET):
- Oil was flat, in the green 0.09%. Price per barrel of West Texas Intermediate crude: $52.99.
- Gold was also flat, in the red 0.06% and at $1,870 as of press time.
- The 10-year U.S. Treasury bond yield climbed Thursday to 1.102 and in the green 1.6%.
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