Bitcoin and other cryptocurrencies experienced a significant selloff on Friday, bringing an end to weeks of historically low volatility. As digital assets plummeted through crucial levels, traders are searching for someone to hold responsible, and many fingers are pointing at Elon Musk.
Over the past 24 hours, the price of Bitcoin has dropped by 7% to $26,550. It has even fallen below $25,500, reaching its lowest level since mid-June. At the beginning of the week, Bitcoin was valued near $29,500, which had remained stable for weeks in an unusually low volatility period. While the stock market has seen fluctuations, such excitement has eluded Bitcoin. Traders had anticipated an end to the low volatility but certainly did not expect such a dramatic downward movement.
Andrew Lawrence, CEO of custody group Censo and a former partner at crypto hedge fund Pantera Capital, commented on the situation, stating, “Bitcoin has plunged in recent days, and I think we could have further to fall. Volumes are just really low, and retail buyers are certainly not yet entering the market significantly.”
The selloff has caused havoc in the crypto derivatives space, particularly in the market for leveraged trading in Bitcoin perpetual futures. In the past 24 hours alone, nearly $500 million in bullish bets on Bitcoin’s direction have been liquidated on exchanges. This represents one of the largest futures losses experienced this year.
It remains to be seen where Bitcoin will go from here and whether Elon Musk’s actions will continue to impact its value so dramatically.
Elon Musk and Bitcoin’s Plunge
Elon Musk’s recent actions have caused a stir in the world of cryptocurrency. The Wall Street Journal revealed that Musk’s private company, SpaceX, wrote down the value of its Bitcoin holdings by a staggering $373 million in 2020 and 2021. Furthermore, SpaceX reportedly sold some of its Bitcoin, adding fuel to the fire.
While there may be other factors at play, such as concerns over inflation and interest rates, many are pointing the finger at Musk. Known for his outspoken support of crypto, Musk’s influence in the market cannot be ignored.
Antoni Trenchev, co-founder and managing partner at crypto lender Nexo, commented on the situation: “SpaceX’s writedown of crypto-assets has everyone pointing the finger at Musk for Bitcoin’s plunge. Elon has always had an outsized hand in crypto markets.”
Traders are closely monitoring the price of Bitcoin, especially since it has fallen below several key technical levels. The focus now is on whether Bitcoin can regain its 200-week moving average at around $27,400. The situation is looking bleak as Bitcoin has dropped below its 20-, 50-, and 200-day moving averages. Trenchev warned, “If $24,800 doesn’t hold, you are looking at $23,000 and then $20,000 comes into play.” This would mean an additional 25% decline from current levels.
Bitcoin isn’t the only cryptocurrency feeling the pressure. Ether, the second-largest crypto, fell 6% and is now trading below $1,700. Other altcoins like Cardano and Polygon also experienced significant drops of 4% and 6%, respectively. Even memecoins like Dogecoin and Shiba Inu were not spared, with losses of 7% and 6% respectively.
It remains to be seen how the cryptocurrency market will respond to Elon Musk’s influence and the current market conditions. Traders and investors are advised to closely monitor price action and be prepared for further potential declines.
