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Market Wrap: Bitcoin Tumbles to $9.8K; Investors Continue Plowing Crypto Into DeFi

Bitcoin price took another dive while DeFi is still looking mighty attractive to investors.

Sep 4, 2020 at 8:36 p.m. UTC
Updated Sep 14, 2021 at 9:52 a.m. UTC

Bitcoin is in bear territory for the third straight day and investors are still looking to DeFi to capture gains during the dump.

  • Bitcoin (BTC) trading around $10,606 as of 20:00 UTC (4 p.m. ET). Slipping 0.90% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $9,894-$10,081
  • BTC below its 10-day and 50-day moving averages, a bearish signal for market technicians.

Bitcoin trading on Coinbase since September 2.

Bitcoin’s price dropped below $10,000 Friday, sliding as low as $9,894 on spot exchanges such as Coinbase. 

“It’s not the best look for BTC from a momentum and positive volume standpoint, to be honest,” said Constantine Kogan, partner at crypto fund of funds BitBull Capital. 

David Lifchitz, chief investment officer for crypto quantitative firm ExoAlpha, says traders are taking profit after bitcoin could not get past $12,100. It may seem like a long time ago but the price went as high as $12,058 only Tuesday

“It looks like some bitcoin holders decided that this last failed breakout was one too many,” he told CoinDesk. “A full move could potentially bring the price back toward $9,500.

Bitcoin trading on Coinbase the past week.

Lifchitz added that a few more fundamental factors that might be influencing the bearish bitcoin run. 

“We observed that the market started to fade as South Korea’s largest exchange, Bithumb, had been raided by police,” he noted. 

“It could also be miners deciding to monetize their rewards,” Lifchitz added. Indeed, bitcoin holders, which could include larger holders such as miners, are pushing more inflows into exchanges to its highest levels since late July.

Total bitcoin transfer volume into exchanges the past three months.

“In my opinion, this is a classic case of an overstretched market, which had advanced too much too quickly, and so was in dire need of consolidation,” said Jean-Marc Bonnefous, managing partner of multi-asset manager Tellurian Capital. “Crypto is dropping in sympathy with other traditional risk assets,” he added. 

Equities indexes were in the red Friday:

Alessandro Andreotti, an Italy-based crypto over-the-counter trader, is optimistic despite the currency cryptocurrency market environment. “Bitcoin has been extremely oversold. It actually reminds me of the March crash,” he said. “But, honestly, I think it can bounce back after this drop.”

More crypto locked in DeFi

Ether (ETH), the second-largest cryptocurrency by market capitalization, was down Friday, trading around $392 and slipping 2.5% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Yields in DeFi may become important to crypto traders should the market continue to show bearish signals: Ether locked in DeFi is up, from 5 million to 6.9 million in the past week, a 35% increase.

Ether locked into decentralized finance the past month.

Investors also continue to lock bitcoin into decentralized finance. There are now over 74,000 BTC in use on Ethereum as those who lock in bitcoin gain a yield or profit in the DeFi ecosystem. In the past week, the amount of bitcoin in DeFi has increased 33%. 

“An amazing amount of BTC is locked into DeFi, earning hodlers ‘dividends’ for simply owning the asset,” noted Henrik Kugelberg, a Swedish crypto over-the-counter trader. 

Bitcoin locked into decentralized finance the past month.

Other markets

Digital assets on the CoinDesk 20 are almost all in the red Friday. Notable winners as of 20:00 UTC (4:00 p.m. ET): 

  • eos (EOS) + 4.5%
  • neo (NEO) + 0.22%

Notable losers as of 20:00 UTC (4:00 p.m. ET): 

Commodities: 

  • Oil is down 4.2%. Price per barrel of West Texas Intermediate crude: $39.50.
  • Gold is in the green 0.25% and at $1,935 as of press time.

Treasurys:

  • U.S. Treasury bonds yields all climbed Friday. Yields, which move in the opposite direction as price, were up most on the 10-year, in the green 11.2%.

The CoinDesk 20: The Assets That Matter Most to the Market

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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