Market Wrap: Bitcoin Sell-Off Deepens as Equity Volatility Rises

Analysts expect further choppiness this week as investors seek safety from risk assets.

AccessTimeIconSep 20, 2021 at 9:20 p.m. UTC
Updated May 11, 2023 at 4:37 p.m. UTC
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Cryptocurrencies sold off on Monday as stocks suffered their steepest decline in weeks. Signs of stress in China’s credit markets over the weekend contributed to bearish sentiment across global markets and triggered a rise in the CBOE Volatility Index (VIX) to levels last seen in May.

Bitcoin dipped below its 200-day moving average and was trading at around $44,000 at press time. The cryptocurrency is down about 7% over the past 24 hours. Initial support is at the $40,000-$42,000 breakout level that was achieved on Aug. 6.

Roughly $1 billion in BTC liquidations occurred Monday morning, and more than 7,000 BTC left exchanges during the same period, according to data from CryptoQuant.

“Some have attributed the sudden dip to the ongoing Evergrande situation in China, which has already caused turmoil in traditional markets,” Jonas Luethy, a trader at the U.K.-based digital asset broker GlobalBlock, wrote in email to CoinDesk, referring to the cash-strapped property company in China.

“Analysts have suggested a choppy week is ahead, with a potential bitcoin pullback to as low as $41,000, although a key support remains at $44,000,” Luethy wrote.

Some analysts expect equities to perform poorly, as well. “We think the mid-cycle transition will end with the rolling correction finally hitting the S&P 500,” Morgan Stanley research analysts wrote in a Monday report. The firm raised the possibility of a 10%-20% correction in the S&P 500 Index driven by deteriorating economic growth and valuation contraction.

Latest Prices

  • Bitcoin (BTC), $43,913, -7.3%
  • Ether (ETH), $3,070, -7.9%
  • S&P 500: -1.7%
  • Gold: $1,764, +0.6%
  • 10-year Treasury yield closed at 1.311%

Bitcoin miner accumulation

Bitcoin miners have been in accumulation mode over the past six months, according to blockchain data compiled by Glassnode. The amount of unspent miner supply has climbed by roughly 13,000 BTC since January, which followed a period of miner distribution at the end of last year.

“After a small spend of around 1,360 BTC in late August, it appears miner balances are increasing once again,” Glassnode wrote in a Telegram post.

Further, “at a market cap of $900B, bitcoin is worth 29.7x more than its total input cost,” Glassnode wrote, which means miners have an incentive to accumulate BTC in hopes of a profit.

For now, crypto mining-related stocks are under pressure as the crypto sell-off deepens. Riot Blockchain (NASDAQ: RIOT) is down about 19% over the past month, while Marathon Digital (NASDAQ: MARA) is down 4%, compared with a 9% decline in BTC over the same period.

Bitcoin miner unspent supply (Glassnode)

Fund flows rise on low volume

Digital asset investment products saw inflows totaling $42 million last week, signaling another week of improved sentiment among investors. This marks the fifth consecutive week of inflows.

“This improved sentiment could be a seasonal phenomenon, but we are not seeing a commensurate rise in volumes in investment products,” CoinShares wrote in a report published Monday. “This suggests that some investors are taking advantage of recent price weaknesses and the continued rise in alt-coin popularity.”

Despite inflows of $15 million over the last week, bitcoin, the world’s largest cryptocurrency by market value, has suffered the most from negative investor sentiment with inflows in only three of the last 16 weeks.

Solana, which suffered a network outage that lasted nearly 20 hours last week, saw inflows of $4.8 million. Ethereum and multi-asset investment products saw inflows of $6.6 and $3.7 respectively.

Screenshot 2021-09-20 at 17.47.28.png

DeFi correlations

Decentralized finance (DeFi) tokens had an impressive run since July, although bullish sentiment is starting to wane. Some analysts point to the nearly 15% decline in Solana’s SOL token over the past week as a sign of profit-taking in the DeFi market.

The chart below shows DeFi tokens are fairly correlated with each other, but the correlation with ETH is relatively weak. “ETH had its monster rally earlier this year while DeFi lagged, which explains this phenomenon,” Delphi Digital, a crypto research firm, wrote in a blog post.

DeFi tends to move in and out of favor, albeit with short-term opportunities for investors to diversify their core BTC and ETH holdings given the weak correlations.

But over the long term, “the ultimate point still remains true: Most investors were better off holding ETH and BTC rather than playing the passive allocation game in DeFi,” Delphi Digital wrote.

Screen Shot 2021-09-20 at 3.08.11 PM.png

Altcoin roundup

  • Christie’s will sell some of the earliest NFTs in its first ETH-only auction: The international auction house is listing the Curio Cards, Art Blocks Curated and VeeFriends non-fungible token projects in a live auction on Oct. 1. The full set of 31 Curio Cards, including the misprinted #17b, is estimated to fetch between 250 and 350 ETH, or between $870,000 and $1.3 million. The auction also marks the first time Christie’s live bidding will be denominated in ETH instead of the usual local currency.
  • Cross-chain protocol PNetwork loses $12M in hack: PNetwork, a DeFi system that allows different blockchains to communicate with each other, said it lost 277 bitcoins ($12 million) after an attacker found a bug in its code, reported CoinDesk’s Sheldon Reback. The attack targeted its pBTC token on the Binance Smart Chain, pNetwork said in a tweet.
  • Europe’s largest stock exchange to list TRON exchange-traded notes (ETNs): TRON, the cryptocurrency created by Chinese entrepreneur Justin Sun, has arrived on the Deutsche Boerse, Europe’s largest stock exchange, in the form of a VanEck-issued exchange-traded note (ETN), reported CoinDesk’s Ian Allison. VanEck also launched SOL and DOT ETNs. The products are being listed on Deutsche Boerse Xetra on Monday, with trading to commence on Tuesday, according to Gabor Gurbacs, director of digital asset strategy at VanEck.

Relevant News

Other markets

All digital assets in the CoinDesk 20 ended the day lower.

Notable winners as of 21:00 UTC (4:00 p.m. ET):

  • None

Notable losers:

  • EOS (EOS), -15.5%
  • Algorand (ALGO), -15.3%


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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies 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 with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.

Damanick Dantes

Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

Tracy Wang

Tracy was the deputy managing editor at CoinDesk. She owns BTC, ETH, MINA, ENS and some NFTs.

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