Market Wrap: Musk-Induced Sell-Off Spurs Crypto Price Drop Before a Slight Recovery

Bitcoin dipped below $36K and ether fell under $2.6K on Tesla CEO’s bearish tweets, wiping out some leveraged players in the market.

AccessTimeIconJun 4, 2021 at 8:33 p.m. UTC
Updated Sep 14, 2021 at 1:06 p.m. UTC

A bearish tweet from Elon Musk wiped out some long positions, providing some market uncertainty on direction heading into the weekend.

  • Bitcoin (BTC) trading around $36,826 as of 21:00 UTC (4 p.m. ET). Losing 4.4% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $35,814-$39,211 (CoinDesk 20)
  • Ether (ETH) trading around $2,684 as of 21:00 UTC (4 p.m. ET). In the red 3.8% over the previous 24 hours.
  • Ether’s 24-hour range: $2,566-$2,866 (CoinDesk 20)

Bitcoin affected by Musk, again

Bitcoin’s hourly price chart on Bitstamp since June 1.
Bitcoin’s hourly price chart on Bitstamp since June 1.

Bitcoin, the world’s largest cryptocurrency by market capitalization, was down Friday by 4.4% as of press time. It was near the 10-hour moving average and below the 50-hour, a sideways-to-bearish signal for market technicians. 

BTC’s price plunged from $39,211 at 00:00 UTC (8:00 p.m. ET Thursday) to $35,814 by 15:15 UTC (8:15 a.m. ET) Friday, an 8.6% dump based on CoinDesk 20 data. Bitcoin then recovered somewhat, at $36,826 as of press time.

Tesla CEO and amatuer crypto commentator Elon Musk once again was a catalyst for BTC’s market fall after he tweeted a perplexing meme suggesting some sort of breakup with the cryptocurrency. 

“The market movement post-Musk's tweets continues to show how nascent this asset class is,” said Kevin Kang, co-founder of crypto hedge fund BKCoin Capital. “A lot of new retail investors tend to panic-sell post-Musk tweets.”

It’s hard to predict where the market will go into the weekend, according to Andrew Tu, an executive at quant trading fund Efficient Frontier. 

“Hard to say where we go – fundamentally there are tons of funds and interest from traditional finance in crypto now,” Tu said. “At the same time a lot of this is still retail speculation, and there definitely is still a bubble that hasn't popped yet.” 

Leverage plays role in bitcoin price plunge

Bitcoin liquidations, in aggregate, the past week.
Bitcoin liquidations, in aggregate, the past week.

As the price of BTC was falling the past 24 hours, leveraged traders going long were wiped out, causing the price dump to exacerbate. At 00:00 UTC (8:00 p.m. ET Thursday), as crypto started seeing heavy selling, leveraged bulls saw their positions liquidated, the blockchain equivalent of a margin call. This included over $66 million in liquidations from 04:00-07:59 UTC (12:00-3:59 a.m. ET), a week-high. 

“We’ve seen today that investors are willing to leverage their positions,” said Elie Le Rest, partner at quant fund ExoAlpha. 

BKCoin Capital’s Kang appears hopeful that as more big-time investors enter the space, a tweet from Musk might some day not mean a cascading crypto fall. 

“As more institutional investors come into the space, we expect Musk's tweets to affect the market less and less, but we are far from that point at the moment,” said Kang.

Ether and bitcoin correlation holding

Ether’s hourly price chart on Bitstamp since June 1.
Ether’s hourly price chart on Bitstamp since June 1.

The second-largest cryptocurrency by market capitalization, ether, was trading around $2,684 as of 21:00 UTC (4:00 p.m. ET), slipping 3.8% over the prior 24 hours. The asset is above the 10-hour moving average but below the 50-hour a sideways signal for market technicians. 

Ether fell from $2,866 at 01:45 UTC (7:45 p.m. ET Thursday) to $2,566 by 15:30 UTC (8:30 a.m. ET) Friday, a 10.4% slide based on CoinDesk 20 data. ETH has regained some of that, at $2,684 as of press time.  

Over the past month, ether’s 90-day correlation with bitcoin has been above 0.70; the rate has held remarkably steady, hovering around that level and at 0.76 as of press time. A correlation coefficient of 1.0 means assets are working perfectly in tandem, while 0 means not at all. 

Bitcoin and ether’s 90-day correlation the past month.
Bitcoin and ether’s 90-day correlation the past month.

It is common for cryptocurrencies to move in tandem during less-than-bullish conditions, noted Efficient Frontier’s Tu. “Most of crypto has become correlated,” he told CoinDesk.

ETH’s big differentiator – its role in decentralized finance (DeFi) – has deflated somewhat, said Jean-Marc Bonnefous, managing partner of investment fund Tellurian Capital.  

“I guess we are now in a lower volatility phase after the doge-like buying frenzy and also after the recent wave of liquidations and margin calls on ERC-20 collateral last month,” Bonnefous said. 

Ether gas prices rising again

Costs for various transactions on Ethereum.
Costs for various transactions on Ethereum.

After median gas prices on Ethereum dropped to a three-month low of 24 gwei May 30, the rate has been rebounding. According to data aggregator Dune Analytics, gas, which is required to conduct transactions, is now at a median of 29 gwei as of press time. Gwei is the smallest unit of account on Ethereum, worth 0.000000001 ETH. 

“The cost of gas fluctuates with the supply and demand for processing power,” noted Constantin Kogan, a crypto investor and co-founder at BullPerks. “Right now, with a short dip, activity on the network declined hence the fees went down.” 

Rich Rosenblum, co-founder of crypto market maker GSR, told CoinDesk the lack of market opportunities in DeFi is what’s causing network activity on Ethereum to fall. 

“DeFi is less profitable when governance tokens aren’t rallying,” Rosenblum said.

Other markets

Digital assets on the CoinDesk 20 are mostly red Friday. Notable winners as of 21:00 UTC (4:00 p.m. ET):

Notable losers:



  • Gold was in the green 1.1% and at $1,891 as of press time.


  • The 10-year U.S. Treasury bond yield fell Friday to 1.559 and in the red 4%.


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