Bitcoin Tumbles Most Since May and El Salvador Buys the Dip

Price drop triggers about $3 billion of liquidations of trading positions due to margin calls.

AccessTimeIconSep 7, 2021 at 7:40 p.m. UTC
Updated May 11, 2023 at 6:45 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Bitcoin tumbled 11.3%, the most since May, leading a broad retreat from digital assets even as bullish investors touted El Salvador’s adoption Tuesday of the largest cryptocurrency as legal tender.

As of press time bitcoin was changing hands around $46,7561, down from over $52,000 earlier in the day. At one point during the selloff the largest cryptocurrency tumbled as low as $42,900.

The “[market] had been getting ahead of itself, lots of complacency,” Fredrick Collins, an options trader and researcher at Glassnode, told CoinDesk.

The sell-off triggered liquidations of billions of dollars of trading positions due to margin calls, across both centralized and decentralized exchanges. According to the website Bybt, about $3 billion of liquidations were recorded in the past four hours.

One perspective is that the correction might help to reset cryptocurrency markets, with excessively leveraged trading positions getting shaken out.

“This was a healthy event today,” Collins said.

All major cryptocurrencies were in the red.

Ether, the native cryptocurrency of the Ethereum blockchain, tumbled 20% to $3,138, while Cardano’s ADA token lost 23%. Uniswap’s UNI token fell 27% and XRP was down 28%.

El Salvadorian President Nayib Bukele, whose push to adopt bitcoin as legal tender took effect this week, tweeted that he was “buying the dip” with “150 new coins added.“

In traditional markets, U.S. stocks fell as investors returned from the three-day Labor Day holiday weekend. Stocks had traded near all-time highs last week and, according to Bloomberg, investors showed fresh signs of caution due to prospects for a growth slowdown amid spreading Delta variant cases of COVID-19.

The U.S. dollar rose in foreign exchange markets. The yield on 10-year U.S. Treasury bonds increased 0.05 percentage point to 1.37%.

CoinDesk’s Omkar Godbole contributed to this report.



Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.

Bradley Keoun

Bradley Keoun is the managing editor of CoinDesk's Tech & Protocols team. He owns less than $1,000 each of several cryptocurrencies.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.