Bitcoin, Ether lose key support levels; altcoins slide amid FTX liquidation woes
Bitcoin fell above $25,000 in Asia on Tuesday morning after briefly losing key support levels for the first time in nearly three months. Ether also slipped and lost control of the $1,600 support level. All other top 10 non-stablecoin cryptocurrencies also posted losses, with XRP leading the losing pack with a 24-hour decline of more than 5%. The decline came ahead of a possible FTX liquidation, which could see the collapsed crypto exchange sell $3.4 billion worth of its crypto assets by year-end. U.S. stock futures fell slightly after Wall Street posted intraday gains on Monday, as investors await key U.S. inflation data this week.
Bitcoin briefly falls below $25,000
According to data from CoinMarketCap, Bitcoin has fallen 2.72% to $25,115.32 as of 7:30 a.m. in Hong Kong in the last 24 hours, down 2.57% this week. The world’s largest cryptocurrency fell to its lowest price since June 15 on Tuesday morning, reaching $24,930.30.
Ether posted a bigger loss, falling 4.31% to $1,547.18. Over the past week, it has lost 4.79% and hit $1,533.43 on Tuesday, its lowest level in six months.
All other top 10 cryptocurrencies excluding stablecoins posted losses in the last 24 hours. XRP led the losers, falling 5.17% to $0.4727, a weekly loss of 6.92%.
“The ongoing decline in altcoin values appears to be related to FTX’s impending asset liquidation approval, a move that could impact the market value of many top cryptocurrencies, including XRP, in which FTX holds a significant stake,” said John Stefanidis, CEO of the blockchain infrastructure foundation Balthazar DAO.
Crypto exchange FTX, which went bankrupt in November 2022, is expected to receive court approval on Wednesday to liquidate an estimated $3.4 billion in crypto holdings. The company proposed selling up to $100 million worth of crypto assets per week, which could be expanded to $200 million.
The impending FTX liquidation suggests the crypto market could see “another $3.4 billion in crypto-to-fiat off-ramping – a potential liquidity gap that would be severe without Signature Bank, Silicon Valley Bank and Silvergate Bank “which have been responsible for at least 50% of all fiat-to-crypto growth in recent years,” said Markus Thielen, head of research and strategy at digital asset service platform Matrixport, in an emailed statement. Report sent by email.
The event could hit altcoins particularly hard, Thielen said, due to “unfavorable tokenomics that force early project investors (founders, venture capital investors, etc.) to make prudent financial and survival decisions and liquidate positions.”
According to a Monday report from European alternative asset manager CoinShares, digital asset investment products saw an outflow of $59 million in the week ended September 8, marking the fourth consecutive month in a string of outflows totaling $294 million.
Coinshares also highlighted net inflows into short investment products, suggesting that “sentiment remains poor for the asset class,” attributing the gloom to “ongoing concerns over regulation of the asset class and recent dollar strength.”
The total crypto market cap fell by 2.88% to $1.01 trillion in the last 24 hours, while trading volume increased by 60.28% to $32.35 billion.
