Crypto traders report increased selling pressure ahead of Monday's open

Quick Take

  • Crypto markets continued to trade in the red over the weekend
  • Professional traders and investors reported “apathy” and increased selling pressure ahead of Monday’s trading session — which is expected to be volatile 
  • Driving the bearishness is new data out of China showing its manufacturing sector taking a big hit from coronavirus

Cryptocurrency investors and traders were working late into the day Sunday, preparing for global stock markets to re-open on Monday. 

Assets ranging from oil to copper to bitcoin dropped precipitously throughout last week's trading session as fears tied to the spread of coronavirus gripped markets. The market rout in U.S. equities extended into correction territory, pulling back by more than 10% over the course of last week. Bitcoin has shed an additional 2.2% since U.S. markets closed on Friday, trading down more than 11% since Monday. 

Dow Jones Industrial Average, TradingView

As reported by The Wall Street Journal on Sunday, Wall Street is preparing for an "unruly week."

“You have a tremendous amount of people who needed cash,” George Gero, managing director at RBC Wealth Management, told the WSJ. “There is no haven at the moment with the exception of Treasurys.”

Still, Japanese stocks reversed losses as S&P 500 futures picked up some gains Sunday night despite market jitters, as reported by Bloomberg

Crypto trading firm B2C2 said it was expecting further volatility in global markets following a weekend of coronavirus-related headlines, including the first death from the disease in the U.S as well as data from China's National Bureau of Statistics showing a plunge in manufacturing activities

B2C2, which has seen an increase in bitcoin selling activity, expects recent data out of China to translate into another move lower in risk-assets.

"This weekend we saw selling ahead of what looks to be a difficult session on Monday, in expectation of another move lower in risk assets due to China's poor PMI reading," Scott Weatherill, who works out of B2C2's Japan office, said in a statement to The Block. 

Joshua Lim, a trader at Galaxy Digital, the cryptocurrency merchant bank founded by former Fortress trader Michael Novogratz, told The Block that the retail fervor in the crypto market has cooled off. As The Block previously reported, over-the-counter trading desks were seeing more action on the buy-side from smaller traders last week even as bitcoin sold-off. 

"There's been a lot more inbounds this weekend," he said, noting an increase in alt-coin borrowing. Still, he said there hasn't been "panic level of volume."

In a weekend update, trading firm QCP noted "the shorts have it for now." 

Still, some investors were less pessimistic. Su Zhu, co-founder of hedge fund Three Arrows Capital, said a sense of "apathy" has underpinned crypto and equity markets, but said in the long run he doesn't expect that much more selling in crypto.

"Crypto is down 70% from all-time-highs," he said. "U.S. equities are still not that far from all-time-highs." 

He also said the supply shock of the bitcoin halving - which is slated for May - could also help prop up prices in the long-term.

Rich Rosenblum, cofounder of crypto derivatives trading shop GSR, said the firm saw more trading activity over the past two days than he's "remembered in any prior weekend."

"Sentiment is certainly hinging on Cov19," he said.

"While it is going to weigh on risk assets for a while (no easy resolution in site), crypto sentiment still feels pretty good."


© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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