Bitcoin’s deepest selloff since crypto mania kicked off early this year appears to intensifying as the downturn in the cryptocurrency market is showing no signs of abating on the back of a pickup in risk aversion and new risk constellation.
The world’s biggest cryptocurrency was down near 10% to just near US $32,000, the lowest level in nearly two weeks.
The entire cryptocurrency market has almost been closely moving in lockstep with bitcoin throughout the past several days and they also appear to be in the deep dive.
From massive selloff volumes, it appears many traders and investors are locking in gains now before a potential selling spree , a repeat of what happened in April.
As of press time, in the Top 10 big caps, Bitcoin (BTC) is changing virtual hands at US $32,480, Ether (ETH) at US $2,020, ripple (XRP) at US $0.7, Binance Coin (BNB) US $315, cardano (ADA) at US $1.32, Dogecoin (DOGE) at US $0.25, ChainLink (Link) at US $19, UniSwap (UNI) at US $18, Polkadot (DOT) at US $18 and Stellar (XML) at US $0.26.
The important factor here is that unlike previous weeks there is no significant dip buying as fears of further declines against the backdrop of the persistent negative outlook continue to fuel caution and broad risk-off sentiment in the market.
This may open new lows, pushing bitcoin below the US $30,000 level first time in the months. Altcoins would suffer similar percentage-point declines as they have done so far.
To make things worse, almost all margin providers are announcing temporary margin changes on cryptocurrency instruments due to the increasing short-selling as experienced traders use leverages to get ahead of such pullbacks.
It is not unusual for brokers and exchanges to warn customers about tightened margin rules when they brace for “elevated volatility” in the markets.
In addition, on the current level, bitcoin is breaking below the simple 50-day moving average, a key barometer for the buyers and sellers relying on technical charts to calculate their next moves. This pattern is also known as the “death cross” among technical chartists.
It appears the key news recently is media reports about China’s extending its crackdown on cryptocurrency mining. Authorities in the southwest province of Sichuan on Friday ordered cryptocurrency mining projects to shut down.
Bitcoin mining in China accounts for more than half of global bitcoin production.
The upward traction is mostly capped due to very limited buying, which indicates further market-wide losses shouldn’t be ruled out in the coming days.
At the moment, the worry is the current downward drift could be just a little taste of what has to come as risk averse corporate investors bank profits and jump off the sinking ship, leaving retail traders holding the bag.