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Market Wrap: 'Elon Candle' Effect Fades Quickly as Bitcoin Retreats Below $55K

Tesla got the market excited briefly, but bitcoin is still in consolidation mode.

Mar 24, 2021 at 8:25 p.m. UTC
Updated Sep 14, 2021 at 12:31 p.m. UTC
What to know
  • Bitcoin (BTC) trading around $54,771.18 as of 20:00 UTC (4 p.m. ET). Slipping 0.63% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $53,577.33-$57,225.30 (CoinDesk 20)
  • BTC trades below its 10-hour and 50-hour averages on the hourly chart, a bearish signal for market technicians.

Bitcoin trading on Coinbase.

The “Elon Candle” effect on bitcoin appears to be short-lived.

The market jumped early Wednesday after Tesla CEO Elon Musk announced the electric vehicle maker plans to now accept bitcoin as a payment option, and that it won’t convert any receipts of the cryptocurrency back into U.S. dollars. 

On the U.S.-based Coinbase exchange, bitcoin’s price briefly shot above $57,000, compared with the prior day’s $54,400. The reaction recalled the action on Feb. 8 when prices jumped more than $7,000 – the most ever for a single day – after Musk tweeted that Tesla had bought $1.5 billion worth of bitcoin. Traders and T-shirt marketers nicknamed the episode “Elon’s Candle,” after the corresponding vertical shape created on a daily price chart.  

But this time around, the market couldn’t hold onto the gains. At press time, the oldest cryptocurrency was changing hands at $54,599.71, down 0.50% in the past 24 hours.

“Bitcoin received a small bullish bump” from Tesla’s latest news, said Jason Lau, chief operating officer at San Francisco-based crypto exchange OKCoin. “However, bitcoin is still in consolidation mode as traders are still digesting these levels.”

In traditional markets, the dollar index (DXY) rallied to four-month highs Tuesday, and yields on the 10-year U.S. Treasury note dipped slightly to 1.62%, down from last week’s one-year high above 1.7%.

The bitcoin market, meanwhile, is in a “wait-and-see” mode, Lau said.

Such hesitation is also apparent in the bitcoin derivatives market, where the open interest on futures contracts has remained relatively stable since it reached an all-time high on March 13.

Aggregated open interest for bitcoin futures contracts

Ether drops again, Ethereum community looks to speed Eth 2.0 transition

Ether (ETH) was down on Wednesday, trading around $1,637.26 and slipping 4.38% in 24 hours as of 20:00 UTC (4:00 p.m. ET).

The No. 2 cryptocurrency by market capitalization has declined for the fifth straight day, to the lowest point in two weeks. It briefly spiked with bitcoin after Musks’ tweet, to as high as $1,740.58. However, as with bitcoin, the gains dissipated quickly, according to CoinDesk 20.

Ether “has stalled below final resistance from February, a minor hurdle to new all-time highs, after showing signs of exhaustion,” Katie Stockton, a technical analyst for Fairlead Strategies, wrote in an email to CoinDesk.

The Ethereum developer community has recently began spitballing possible dates for speeding up the blockchain network’s transition to a proof-of-stake consensus mechanism, as CoinDesk’s Valid Points newsletter reported earlier Wednesday.

Some members expressed worries that future Ethereum Improvement Proposals (EIPs) would likely decline as more developers focus on “the Merge” to Eth 2.0 once it is approved.

Other markets

Digital assets on the CoinDesk 20 are mostly in red Wednesday. The notable winner as of 20:00 UTC (4:00 p.m. ET):

Notable losers:

Equities:

  • Asia’s Nikkei 225 closed lower by 2.04%.
  • The FTSE 100 in Europe closed in the green 0.20%.
  • The S&P 500 in the United States closed down 0.55%.

Commodities:

  • Oil was up 5.18%. Price per barrel of West Texas Intermediate crude: $60.75.
  • Gold was in the green 0.38% and at $1733.81 as of press time.

Treasurys:

  • The 10-year U.S. Treasury bond yield fell Wednesday dipping to 1.615%.

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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