Blue Monday? Bitcoin tumbles 5% after weekend hits

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The representation of the bitcoin cryptocurrency can be seen in this illustration taken on November 29, 2021. REUTERS / Dado Ruvic / Illustration

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HONG KONG, December 6 – Bitcoin fell nearly 5% on Monday, with the start of the week providing little respite for the world’s largest cryptocurrency after a murderous weekend where it lost at one point more one-fifth of its value.

The rout returned the price of bitcoin and the amount invested in bitcoin futures to their early October level, before a massive price spike that sent the token to a record high of $ 69,000 on November 10.

It was down 3.9% for the last time at $ 47,567.

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Traders said the weekend’s drop was linked to a large move away from riskier assets in traditional markets due to concerns over the Omicron variant of the coronavirus, combined with weaker trade liquidity that tends to affect crypto. -coins on weekends.

“We expect the rest of Q4 to be a tough month; we don’t see the bitcoin strength we typically see after one of these crushing days,” said Matt Dibb at Stackfunds, a fund distributor. Singapore-based crypto.

“The leveraged markets have been completely reset, and the open interest in the leveraged markets has been completely reset.”

Crypto data platform Coinglass showed open interest – the total number of futures contracts held by market participants at the end of the trading day – on all exchanges was $ 16.5 billion versus 23 , $ 5 billion on Thursday, and up to $ 27 billion on November 10.

Bitcoin

“There’s hardly any liquidity on weekends, so markets are slightly more vulnerable to shocks – that and a lot of demand from institutions, and they don’t trade on weekends,” said Joseph Edwards. , head of research at crypto brokerage Enigma Securities in London.

Over the weekend, as prices fell, investors who had bought bitcoin on margin saw the exchanges close their positions, causing a cascade of sales. A range of retail-focused exchanges closed more than $ 2 billion in bitcoin long positions on Saturday, according to Coinglass.

Some exchanges allow traders to place bets 20 times or more the size of their investment, which means that a small move in the wrong direction can cause the exchanges to liquidate client positions when their initial investment is complete.

Ben Caselin, from Asia-based cryptocurrency exchange AAX, said liquidity has become thin due to the move of bitcoin from exchanges to offline digital wallets.

Ether, the world’s second largest cryptocurrency, was also hit on Saturday, albeit less hard. It fell 5.5% on Monday, however, to $ 3,965, from a high of $ 4,868 on Nov. 10, despite winning over its biggest rival.

On Sunday, an ether hit 0.086 bitcoin, its highest since May 2018.

On Monday, CME Group Inc (CME.O) will launch mini ether futures, which they hope will allow traders to better manage the risk of trading the coin.

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Reporting by Alun John in Hong Kong and Tom Wilson in London. Editing by Gerry Doyle and Carmel Crimmins

Our Standards: Thomson Reuters Trust Principles.

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