Just as the European stock markets werre closing this morning, US Treasury bonds were suddenly aggressively bid (yields tumbled) and at the same time, Cryptocurrencies collapsed with Bitcoin crashing below $6,000 to its lowest since Oct 2017.
Well that escalated quickly...
Crashing it back to its lowest since Oct 2017...
There is no immediate catalyst for today's crash but Cryptovest.com's Christine Masters notes 5 recent factors acting on the price of Bitcoin:
Chaos surrounding Bitcoin Cash: As the Bitcoin Cash (BCH) network prepares for a hard fork which would entail a hostile attempt at a takeover through a 51% attack, the markets started to react with negativity. The potential attack of miners is an event that undermines the narratives of the immutability of digital assets, and shows that in fact networks are fragile and dependent on human behavior. The unknown outcome for BCH and by extension Bitmain may be putting pressure on BTC prices.
Miners giving up: Bitcoin mining is a thin-margin game. BTC prices above $5,800 are the absolute minimum, and some mining operations may not be viable even at higher prices. Miners face high difficulty, and may start to unwind their operations. Selling is essential to miners, to keep covering operating costs.
Trader Exodus to USDT: The latest data from CryptoCompare show that the BTC/USDT pair took up more than 62% of all trading, showing an attempt to leave BTC for a stable-priced coin. In the past couple of weeks, USDT trading was relatively subdued, taking up just 44% of volumes. However, activity on Bitfinex suddenly increased, despite the fact that the effective price of BTC was $330 higher on Bitfinex. USDT has also broken below its dollar peg, once again trading at $0.97 on Kraken. The events are helping exaggerate the fears around Bitcoin’s general stability. However, the USDT still serves as a temporary safe haven, although traders also park their funds in other stablecoins, such as TrueUSD (TUSD) and USDC, which trade above $1.
Additionally, on November 11, the Tether treasury mopped up 70 million USDT from circulation, potentially decreasing liquidity on the Bitfinex exchange. The lower number of USDT available may not be enough right now to spark a significant rally.
Bitmex speculation: Bitmex, an exchange where price and volumes are excluded from general BTC statistics, and trading is highly risky and speculative. Bitmex prices have fallen as low as $6,088, based on derivative activity. The price shows the sentiment for BTC is still bearish, allowing speculation to spill over on other markets.
Lower bottom expectations: There are still beliefs the bear market has not seen more selling and capitulation, which could pressure BTC as low as $4,000. The lack of even a hint of a year-end rally is adding to the negative expectations. The stagnant prices of the past month may not be the bottom for BTC, hence the reluctance to bet on a price increase happening soon. Altcoins are making the panic even more significant, as some projects may never recover, both in dollar and BTC terms. As BTC prices have to defend key levels above $6,000, the predictions of an even lower bottom are starting to become a self-fulfilling prophecy.
While Bitcoin is making the headlines, the rest of the crypto space is getting monkey-hammered worse...