Bitcoin, Ether continue to slide; altcoins under pressure – Crypto News – Crypto News
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Bitcoin, Ether continue to slide; altcoins under pressure – Crypto News

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Bitcoin rose slightly on Tuesday afternoon in Asia but remained below the support level of US$26,000. Ether traded below US$1,600, with XRP leading losses across most other top 10 non-stablecoin cryptos, as news of bankrupt crypto exchange FTX possibly selling its US$3.4 billion worth of crypto assets by the end of the year weighed on crypto markets. Investors are also looking forward to August inflation data from the U.S. due for release on Wednesday. 

See related article: Standard Chartered’s crypto custody arm Zodia launches in Singapore

Negative sentiment across crypto market

Bitcoin gained marginally by 0.05% to US$25,819 in 24 hours to 4 p.m. in Hong Kong, bringing its weekly gains to 0.40%, according to CoinMarketCap data. The world’s largest cryptocurrency remained below the support level of US$26,000 as negative market sentiment lingered. 

“The declines in cryptocurrencies came as negative sentiment continued to flow into the markets, in light of the state of anticipation of what might happen on the regulatory side of this market in the United States,” said Samer Hasn, market analyst at multi-asset brokerage firm XS.com.

The U.S. will release August inflation data on Wednesday. “The expectations are for a slight increase in year-on-year inflation, to 3.4% from 3.2% of July. However, the market does not expect any further increase in interest rates, pricing a 93% probability of no change in interest rates at the next Federal Open Market Committee (FOMC) meeting and also not predicting any further rate hike before the end of 2023,” said Matteo Greco, research analyst at the publicly listed digital asset and fintech investment firm Fineqia International. 

“The end of rate hikes, especially if combined with approval of a Bitcoin Spot ETF [exchange traded fund], could represent a major driver to bring new capital into the market and improve liquidity,” Greco said in an emailed statement on Monday. 

Ether, the world’s second biggest cryptocurrency, fell 1.97% to US$1,579 in the past 24 hours, and dropped 2.71% on the week. 

“The break of US$1,650 makes us extremely cautious about Ether, and we could even envision a scenario where prices drop lower into year-end,” Markus Thielen, head of research and strategy at digital asset service platform Matrixport, said in an emailed report.  

“A decline below US$1,500 could bring back the idea that Ether could decline to US$1,000 — a level that would appear justified based on the revenue projection from the Ethereum ecosystem,” Thielen added.

Crypto market is also under pressure as FTX crypto exchange, which went into bankruptcy in November 2022, is likely to receive court approval on Wednesday to liquidate an estimated crypto holding of US$3.4 billion. The firm proposed to sell up to US$100 million in crypto assets per week, which could be extended to US$200 million.

According to Thielen, although sales might have a cap of US$200 million per week, it still implies that FTX creditors could sell every week. 

“It also indicates that crypto will see another US$3.4 billion in crypto-to-fiat off-ramping — a potential liquidity gap that might be hard to fill in the absence of Signature Bank, Silicon Valley Bank, and Silvergate Bank, which were responsible for at least, 50% of all the fiat-to-crypto on-ramping during the last few years,” Thielen pointed out.

Altcoins could be particularly impacted “due to unfavorable tokenomics that compel early investors in projects to make prudent financial and survival decisions, and liquidate positions, Thielen added.

FTX is not the only major player selling assets. Crypto venture capital (VC) funds are also under immense pressure to return funds to their investors. 

“While some crypto VC funds made 10-20x returns, several have had substantial drawdowns, leading investors to prefer cashing out — even if returns were materially higher. For example, Multicoin Capital lost 91% of its value in 2022,” Thielen said.

Total crypto market capitalization fell 0.62% to US$1.03 trillion while market volume rose 82.81% to US$37.73 billion in the past 24 hours. 

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