Market wrap: Musk-induced sell off spurs crypto price decline before slight rally

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A bearish tweet from Elon Musk erased some long positions, creating some uncertainty in the market heading into the weekend.

  • Bitcoin (BTC) trading around $ 36,826 at 9:00 p.m. UTC (4:00 p.m. ET). Lose 4.4% in the previous 24 hours.
  • 24-hour range of Bitcoin: $ 35,814- $ 39,211 (CoinDesk 20)
  • Ether (ETH) is trading around $ 2,684 at 9:00 p.m. UTC (4:00 p.m. ET). In the red 3.8% over the previous 24 hours.
  • 24 Hour Ether Range: $ 2,566 to $ 2,866 (CoinDesk 20)

Bitcoin Affected Again by Musk

Bitcoin hourly price chart on Bitstamp since June 1.
Source: TradingView

Bitcoin, the world’s largest cryptocurrency by market cap, was down 4.4% on Friday at the time of publication. It was near the 10-hour moving average and below 50 hours, a sideways to bear signal for market technicians.

The price of BTC plunged from $ 39,211 at 12:00 a.m. UTC (8:00 p.m. ET Thursday) to $ 35,814 at 3:15 p.m. UTC (8:15 a.m. ET) Friday, an 8.6% dump based on CoinDesk data. 20. Bitcoin then recovered somewhat, to $ 36,826 at the time of publication.

Tesla CEO and Amatuer crypto commentator Elon Musk was once again a catalyst for the BTC market crash after he tweeted a confusing meme suggesting some sort of break with cryptocurrency.

“The market movement after Musk’s tweets continues to show just how nascent this asset class is,” said Kevin Kang, co-founder of crypto hedge fund BKCoin Capital. “A lot of new retail investors tend to panic and sell post-Musk tweets.”

It’s hard to predict where the market will go over the weekend, according to Andrew Tu, an executive at quantitative Efficient Frontier.

“It’s hard to say where we’re going – basically there’s tons of money and interest from mainstream finance in crypto now,” Tu said. “At the same time, this remains largely retail speculation, and there is certainly still a bubble that has yet to burst.”

Read more: Jack Dorsey says Square plans to develop Bitcoin hardware wallet

Leverage plays a role in the fall in the price of bitcoin

Bitcoin liquidations, in total, last week.
Source: Distort

As the price of BTC fell over the past 24 hours, long leveraged traders were wiped out, exacerbating the price decline. At 00:00 UTC (8:00 p.m. ET Thursday) As the crypto began to sell off massively, leveraged bulls saw their positions liquidated, the blockchain equivalent of a margin call. That included more than $ 66 million in liquidations from 4:00 a.m. to 7:59 a.m. UTC (12:00 p.m. to 3:59 a.m. ET), a week high.

“We have seen today that investors are ready to take advantage of their positions,” said Elie Le Rest, partner of the quantitative fund ExoAlpha.

BKCoin Capital’s Kang appears to be hoping that as more high-profile investors enter the space, a tweet from Musk may one day not signify a cascading crypto downfall.

“As more and more institutional investors enter the space, we expect Musk’s tweets to affect the market less and less, but we’re a long way from it for now,” Kang said.

Ether and bitcoin correlation holding

Hourly Ether Price Table on Bitstamp since June 1.
Source: TradingView

The second largest cryptocurrency by market cap, Ether (ETH), was trading around $ 2,684 at 9:00 p.m. UTC (4:00 p.m. ET), slipping 3.8% in the previous 24 hours. The asset is above the 10 hour moving average but below the 50 hour side signal for market technicians.

Ether fell from $ 2,866 at 1:45 a.m. UTC (7:45 p.m. ET Thursday) to $ 2,566 at 3:30 p.m. UTC (8:30 a.m. ET) Friday, a drop of 10.4% based on data from CoinDesk 20. ETH picked up some of this, at $ 2,684 at the time of publication.

Over the past month, the 90-day correlation between ether and bitcoin has been above 0.70; the rate has remained remarkably stable, hovering around this level and at 0.76 at the time of publication. A correlation coefficient of 1.0 means the assets work perfectly in tandem, while 0 means not at all.

90-day correlation between bitcoin and ether last month.
Source: CoinDesk research

It’s common for cryptocurrencies to move in tandem in less than bullish conditions, Efficient Frontier’s Tu noted. “Most of the cryptos have become correlated,” he told CoinDesk.

ETH’s big differentiator – its role in decentralized finance (DeFi) – has deflated somewhat, said Jean-Marc Bonnefous, associate manager of the Tellurian Capital investment fund.

“I guess we are now in a phase of lower volatility after the doge buying frenzy and also after the recent wave of liquidations and margin calls on the ERC-20 guarantee last month,” Bonnefous mentionned.

Ether gas prices rise again

Fees for various transactions on Ethereum.
Source: Dune analysis

After median gas prices on Ethereum fell to a three-month low at 24 gwei on May 30, the rate rebounded. According to data aggregator Dune Analytics, gas, which is needed to complete transactions, now sits at a median of 29 gwei at the time of publication. Gwei is the smallest unit of account on Ethereum, valued at 0.000000001 ETH.

“The cost of gas fluctuates with the supply and demand for processing power,” noted Constantin Kogan, crypto investor and co-founder of BullPerks. “Right now, with a short dip, network activity has declined, resulting in lower charges.”

Rich Rosenblum, co-founder of crypto market maker GSR, told CoinDesk that the lack of market opportunities in DeFi was the root cause of the network’s downfall in Ethereum.

“DeFi is less profitable when governance tokens don’t rally,” Rosenblum said.

Read more: DeFi Project Impossible Finance raises $ 7 million in funding round

Other markets

Digital assets on CoinDesk 20 are mostly red on Friday. Notable Winners at 9:00 p.m. UTC (4:00 p.m. ET):

Read More: NU Gathers 44% On Binance List As Bitcoin, Ether Drop Musk Tweet

  • Gold was in the green at 1.1% and $ 1,891 at the time of publication.
  • The yield on 10-year US Treasury bonds fell to 1.559 and in the red to 4% on Friday.

CoinDesk 20: the most important assets for the market

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