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Crypto markets are under strong selling pressure on Monday as the sector faces a downtrend break.
Bitcoin BTCUSD, -9.45%, the world’s largest crypto by market value, fell almost 7% and is trading at its lowest level in weeks, changing hands at $ 32,669; while Ether ETHUSD, -13.90%, on the ethereum blockchain, was down more than 10% and was trading at $ 1,951.58 on CoinDesk.
Bitcoin is still registering a 12% gain since the start of the year, but this is a paltry sum in the crypto world and significantly reduced from its gain of over 100% since the start of the year. Ether is up 163%, but crossing below the psychologically significant level at $ 2,000 puts it around its lowest point since late May.
However, Michael Burry, who rose to prominence for his betting in times of crisis in the housing market in 2008-09, could say he warned investors who had become passionate about stocks and crypto in 2021. .
Burry, whose investments over a decade ago were made in the movie The Big Short, posted a since-deleted tweet on Friday, warning an impending mother of all accidents.
While the market isn’t grappling with such a severe downturn as the mother of all crashes tweet might imply, the momentum for bitcoin and other cryptos is decidedly pessimistic.
Meanwhile, shares of even popular assets, AMC Entertainment Holdings AMC, -6.02% and GameStop Corp GME, -6.29%. , where trade fell on Monday, against a backdrop of a general recovery in stock markets. That said, AMC remains up over 2,500% year-to-date and GameStop is up 964%.
Experts on the outlook for crypto stocks and memes, which are primarily driven by social media trends and not necessarily fundamentals, have soared quickly and furiously. And strategists have speculated that the low interest rate environment favored by the Federal Reserve has helped to create bubbles in the market’s pockets, as well as fiscal stimulus checks that have given some individual investors what to make high risk bets in the market.
Crypto, in its brief history, has been particularly volatile and subject to periods of euphoria, crashes, and long periods of sluggish prices. This was the case in December 2017, as bitcoin hit a value close to $ 20,000 before plunging into a multi-year pullback.
It is impossible to know if this cycle will happen again.
The most recent downturn in bitcoin and its ilk is blamed on a crackdown on digital currency in China, which has spilled over to the entire industry. The People’s Republic of China has extended its ban on crypto mining and has reportedly ordered Alibaba’s payment unit, Alipay, to crack down on crypto trading.
It’s not just Burry who sees cracks in bitcoin’s uptrend.
Data from CoinShares indicated that digital asset investing products saw a third straight week of exits totaling nearly $ 80 million, the longest period of exits since February 2018, with bitcoin being the sell-off. the most intense.
Katie Stockton, technical analyst at Fairlead Strategies, said recent declines are testing support for bitcoin and ether and other assets at the complex.
She said bitcoin selling appears to be overkill, but advises customers to wait until they jump into the fray to try and identify the right deals.
The crypto drop also comes as the Dow Jones Industrial Average DJIA, + 1.76% had its best day since March and the S&P 500 SPX Index, + 1.40% recorded its best daily rise since mid-May. , which has led some to speculate that investors are changing. assets from unconventional assets to more traditional assets.
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