Bitcoin plunges to near $6,000 levels, hits new low since May 2019

Quick Take

  • The price of bitcoin has fallen sharply by over 20% this morning.
  • Bitcoin is now trading at around $6,200 levels. This represents a new low since May 8, 2019.
  • Rich Rosenblum, co-founder of crypto market maker GSR, told The Block: “Today’s move lower was precipitated by the liquidation of both BTC-collateralized USD loans and levered longs in the BTC futures market.”
advertisement

The price of bitcoin has fallen sharply by over 20% this morning.

The world’s largest cryptocurrency is now trading at around $6,200 levels, according to data from TradingView. This represents a new low since May 8, 2019.

'On top of the general macro panic impacting the market, today’s move lower was precipitated by the liquidation of both BTC-collateralized USD loans and levered longs in the BTC futures market," Rich Rosenblum, co-founder of crypto market maker GSR, told The Block.

"65% loan to value has been the benchmark, so with a good amount of loans delivered with bitcoin between 8500-9500, 6000 is where a good amount of liquidation should occur. In terms of sentiment, speculators have been overweight BTC, looking for a continued rally ahead of May's halving. So the market had been trading a bit long, despite recent weakness," Rosenblum added.

Prices of other top coins, including ether (ETH), bitcoin cash (BCH) and XRP, are also all down by over 20% at the time of writing.

Max Boonen, co-founder of crypto market maker B2C2, told The Block that a "very violent" move took place today as "risk assets are dumped across the board."

"This is going to put a dent in the narrative that that bitcoin is an uncorrelated asset - one we always disagreed with," said Boonen. "However, it was a great day for savvy speculators. We at B2C2 priced throughout the day and allowed our clients to transact record volumes as they adjusted their views."

Denis Vinokourov, head of research at London-based digital asset firm Bequant, told The Block that "widespread panic and position liquidations" took place after the U.S. President Donald Trump announced sweeping new travel restrictions on Europe in a bid to combat the spread of the coronavirus, which resulted in crypto fall.

"This downward pressure caused crypto markets to suffer a liquidity crunch as the cost of capital spiked up across trading venues. This tightening was exacerbated by the fact that the market is highly dominated by sell-side liquidity providers/market-making firms, with only a limited buy-side demand," said Vinokourov.

Markets around the globe are in red. Yesterday, the Dow Jones as well as the S&P 500 index closed down by 5%. The declines deepened after the World Health Organization declared coronavirus as a pandemic.

Ross Middleton, chief financial officer at decentralised exchange DeversiFi, told The Block: "Traders are pulling money out of Bitcoin to fund their margin calls on other asset classes (equities, commodities, etc). Perhaps they think that there will be better short term opportunities to go long other asset classes in the near future. There is a general 'risk-off' approach to all risk assets, including crypto."


© 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.

Related Reading

Get Your Crypto
Daily Brief

Delivered daily, straight to your inbox.

Layer-1 Platforms: A Framework for Comparison

The Block Research was commissioned by Algorand to create Layer-1 Platforms: A Framework for comparison, which provides a “look under the hood” at seven platforms: Algorand, Avalanche, Binance Smart Chain, Cosmos, Ethereum/Ethereum 2.0, Polkadot, and Solana. We assess their technical design, related ecosystem data, and qualitative factors such as key ecosystem members to get an understanding of how they differ. Having done this analysis, we draw some insights for what the future of the broader smart contract landscape could look like for years to come. 
Read Full Story
Aug 11, 2021, 5:18PM UTC
More