Bitcoin rose to nearly $26,000 in Asia on Wednesday morning after falling below the key $25,000 support level for the first time in three months on Tuesday. Ether also rallied to nearly $1,600, while all other top 10 non-stablecoin cryptocurrencies posted gains, with Toncoin leading the gainers with a 24-hour rise of over 12%. The rally followed the recent panic sell-off due to an impending liquidation of collapsed crypto exchange FTX, which is expected to offload $3.4 billion of its crypto holdings by year-end. U.S. stock futures were flat after Wall Street closed lower on Tuesday on oil price concerns.
Bitcoin Nears $26,000; Overreactions to the FTX liquidation plan?
Bitcoin was up 3.02% at $25,867.44 as of 7:30 a.m. in Hong Kong in the last 24 hours and was up 0.36% this week, according to CoinMarketCap data. The world’s largest cryptocurrency briefly hit a nearly three-month low of $24,930.30 and rebounded to a high of $26,451.94 on Tuesday.
Ether saw a similar rally, rising 3.10% to $1,595.00, but has lost 2.28% over the past seven days. The second-largest cryptocurrency hit a 24-hour high of $1,619.11 on Tuesday.
Current crypto market sentiment reflects “the late bear market of 2015 and 2019” as “a sustained period of weak momentum has pushed the fear and greed index to a nine-month low,” crypto research firm K33 wrote in a report Tuesday.
“The deteriorating sentiment is due to expected selling pressure associated with FTX balances of $560 million in BTC, $192 million in ETH, and $1.16 billion in SOL,” K33 wrote. “The market also expects further selling pressure from Mt. Gox and US Silk Road Bitcoins custodians.” The timing and structure of these potential selling flows are unknown, but have all been crucial forces in reinforcing already tense sentiment.”
FTX, which entered bankruptcy in November 2022, could receive court approval on Wednesday to sell around $3.4 billion of its crypto holdings. However, according to Greg Moritz, co-founder and chief operating officer of crypto hedge fund Alt Tab Capital, the recent sell-off ahead of the liquidation could be an overreaction.
“FTX has an interest in obtaining the highest price for its assets and is likely to conduct the liquidation in an orderly and rational manner to minimize the impact on market prices,” Moritiz said in an emailed comment.
“Overall, the actual impact of the possible FTX liquidation on the crypto market is likely to be quite small and drag on for months, however we already have downward pressure on many coins due to the proposal,” Moritz added. “This is primarily due to the crypto retail market not fully understanding FTX’s proposal and reacting more on fear than logic. When that happens, attractive buying opportunities tend to arise for sophisticated, long-term investors.”
All other top 10 non-stablecoin cryptocurrencies posted gains in the last 24 hours. Toncoin led the gainers, rising 12.49% to $1.84 and gaining 3.73% for the week.
Toncoin is the native token of the Open Network (TON), a blockchain-based, decentralized network originally developed by messaging app Telegram, whose price has increased by over 30% in the last month. TON should have one presentation with Telegram at the ongoing Token2049 event in Singapore on Wednesday with the theme: “Transforming Telegram to Web3 with Toncoin.”
The total crypto market cap increased by 2.54% to $1.03 trillion in the last 24 hours, while trading volume increased by 9.22% to $35.33 billion.
US stock futures remain unchanged ahead of the release of the consumer price index
U.S. stock futures were trading flat as of 9 a.m. in Hong Kong. Both Dow futures and S&P 500 futures fell 0.01%, while Nasdaq futures edged up 0.05%. All three major U.S. indexes posted losses during Tuesday’s trading hours, with Nasdaq leading the way with a 1.04% decline.
Major stock indexes in Asia were mixed at 9:30 a.m. in Hong Kong. China’s Shanghai Composite and Hong Kong’s Hang Seng rose, while South Korea’s Kospi and Japan’s Nikkei 225 posted losses.
US-based computer technology company Oracle Corp. led the decline on Wall Street on Tuesday, with shares closing the day down 13.50%. The company on Monday reported its fiscal 2024 first-quarter revenue and second-quarter profit guidance, both of which were below expectations as demand for cloud computing weakens.
After Oracle, cloud-heavy technology companies Microsoft and Amazon also posted losses on Tuesday, falling 1.83% and 1.31%, respectively.
On the inflation front, the US consumer price index (CPI) for August will be released on Wednesday, with analysts expecting the annual inflation rate to accelerate.
Annual growth in the core CPI above 4.5% may indicate higher-than-expected inflation, Tony Sycamore, market analyst at investment adviser IG Australia Pty, told Bloomberg on Wednesday, which could lead to the S&P 500 “back into the Express train gets on”. to the August low of 4,350/30.”
Meanwhile, rising oil prices are adding to inflation concerns, with benchmark Brent Crude closing 1.6% higher at $92.06 on Tuesday, its highest since November 2022.
“People are a little concerned that energy prices have risen quite a bit in the last few weeks, and that raises some concerns as we look forward to November,” which could lead to the Federal Reserve raising interest rates again, says Thomas Hayes, chairman of public company Great Hill Capital LLC, said in a Reuters report on Wednesday.
The CME FedWatch Tool predicts a 93 percent chance that the central bank will keep the current interest rate unchanged in September, which is currently in the range of 5.25% to 5.50%. The probability of another break in November is 56.8%, compared to 57.6% on Tuesday.
(Updates with equity section.)