Riding The Wave News Summary 174
No, Elon Musk's SpaceX Isn't the Cause of This Multi-Billion-Dollar Bitcoin Bloodbath, Why did Bitcoin drop? Analysts point to 5 potential reasons, & more.
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No, Elon Musk's SpaceX Isn't the Cause of This Multi-Billion-Dollar Bitcoin Bloodbath
Friend.tech generates over $1M fees in 24h, surpassing Uniswap, Bitcoin networks
Bitcoin price on the skids as investors pull $1 billion from crypto
Tweets
https://twitter.com/KobeissiLetter/status/1693304888615207227
https://twitter.com/intocryptoverse/status/1693325016643809631
https://twitter.com/KobeissiLetter/status/1693010067409301562
https://twitter.com/WClementeIII/status/1693019915735744927
https://twitter.com/therationalroot/status/1692947477991706825
https://twitter.com/WhaleChart/status/1692820861521174938
No, Elon Musk's SpaceX Isn't the Cause of This Multi-Billion-Dollar Bitcoin Bloodbath
As of about 06:00 UTC Friday, bitcoin had fallen as much as 9% over the past 24 hours to $25,000 from $28,500 on Binance, leading to a market-wide slump that sent major tokens like litecoin (LTC) tumbling by 14%. This caused more than $1 billion in crypto futures to be liquidated, a 14-month high.
Some pointed to space exploration company SpaceX’s supposed bitcoin sales – an unsubstantiated claim – while others said the bankruptcy of China Evergrande's may have had something to do with the fall. However, neither of these events are the probable cause.
A Wall Street Journal report late Thursday, citing internal company documents, noted Elon Musk's SpaceX had written down the value of its bitcoin holdings in 2021 and 2022 and has sold the cryptocurrency. But that report came out before the plunge, and there's zero evidence the company sold again Thursday.
Professional traders say market structure and liquidations were a likely reason for the sudden drop instead of a singular fundamental catalyst. The market has also been relatively illiquid and flat – creating conditions ripe for sudden movements.
“We've seen BTC [open interest] ramp up in position, with a bias to shorts,” said Decentral Park Capital trader Lewis Harland, in a message to CoinDesk. “The break below $28,500 led to material volumes of longs being liquidated. This has been combined with spot selling ahead of the date (likely anticipating further delays).”
That is because as prices fall, long traders have to sell their positions to avoid getting liquidated – adding to increased selling pressure, but, at the same time, creating an endless loop of falling prices and long position covering.
“U.S. interest rates are rising to multi-year highs. The 10-year yield has pushed to 15-year highs. This is bearish risk assets in general,” Harland added. “If this sell-off in bonds continues we could see continued negative price action in risk assets into the weekend.”
Why did Bitcoin drop? Analysts point to 5 potential reasons
Etoro market analyst Josh Gilbert pinned the drop on a report that SpaceX may have offloaded some or all of its $373 million in Bitcoin holdings, which came from an Aug. 17 article from The Wall Street Journal.
Gilbert said another theory could be the rapid shift in sentiment, due to the broader markets’ expectations of future interest rate hikes from the U.S. Federal Reserve.
“If we also consider some of the weaknesses we’ve seen across global markets — particularly risk assets — over the last few weeks with the expectation that rates will likely stay higher for longer, it was a recipe for a pullback,” Gilbert explained.
Tina Teng, a market analyst from CMC Markets, shared a different opinion, looking to the recent rise in government bond yields as the root cause behind the sell-off.
Teng explained that increasing bond yields typically shows a reduction in liquidity for the broader market.
However, while Teng disregarded the Evergrande crisis as a major reason for Bitcoin’s price swing, Matrixport Head of Research Markus Thielen claimed the risk of a Chinese Yuan devaluation may have played a significant role in the sell-off.
“In August 2015, when China devalued the Yuan for the last time, Bitcoin prices declined by -23% during the two weeks following the devaluation. Before a more meaningful rally started, Bitcoin finished the year +59% from the level of the devaluation,” explained Thielen.
Describing much of the explanations for the decline as “pure speculation,” Horse suggested that since the reports of the SEC hinting its approval of an Ethereum Futures ETF came moments after the dump — a large fund may have offloaded their Bitcoin position to “trigger a cascade to buy ETH.”
Friend.tech generates over $1M fees in 24h, surpassing Uniswap, Bitcoin networks
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