Bitcoin Settles in Below $26K as Altcoins Lead Crypto Declines

In the absence of any positive catalyst, cryptocurrencies took the path of least resistance.

AccessTimeIconAug 22, 2023 at 10:11 a.m. UTC
Updated Aug 22, 2023 at 8:47 p.m. UTC
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Bitcoin (BTC) slipped about 1% during U.S. trading hours on Tuesday to $25,800, with Solana (SOL), Polygon's (MATIC), and Steller's (XLM) among those altcoins down more than 4% over the past 24 hours.

The broad CoinDesk Market Index (CMI) was lower by 1.7%, with ether (ETH) underperforming, down 2.2%.

Looking for a catalyst

With the strong U.S. economic data of late having apparently taken off the table any idea of the Federal Reserve making a dovish pivot on monetary policy, crypto bulls – desperately in search of any positive catalyst – have now pinned their hopes on a spot bitcoin ETF.

While the U.S. Securities and Exchange Commission (SEC) has a number of spot bitcoin ETF applications to rule on, there's no guarantee that a decision will even come this year. More imminent, traders hope, would be a court ruling in Grayscale's lawsuit versus the SEC over that agency's denial of Grayscale's attempt to convert its Bitcoin Trust (GBTC) to an ETF.

There had been chatter that a court decision would come last week, but it never happened, and bulls were frustrated further when nothing was announced this morning.

Wishful thinking dies down

A bump in mentions of “buy the dip,” a dictum among traders referring to purchasing assets that are discounted relative to fundamentals, on social media forums flattened out amid the lame price action.

“We saw a huge rise in 'buy the dip' mentions. This indicates that trader optimism was quite high that there would be a quick market recovery,” Santiment said in a Monday note. “But looks at how the wishful thinking has died down considerably in the past few days.”

The firm scraped data from Reddit, X, Telegram and 4Chan for the findings. Falling mentions meant traders were no longer certain of a market recovery and that “pessimism was beginning to take over again as market caps fade,” it said.

Professional traders were, however, likely to utilize sophisticated instruments such as futures and options to make returns, analysts at crypto exchange Bitfinex shared with CoinDesk in a note.

“Data suggests that long volatility strategies have been deployed extensively over the weekend after the price crashed below the $25,000 level,” the analysts wrote. “In turbulent times, traders might expect high volatility to continue and use options strategies (like straddles or strangles) to profit from this.”

Edited by Sheldon Reback and Stephen Alpher.


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Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

Stephen  Alpher

Stephen Alpher is CoinDesk's managing editor for Markets. He holds BTC above CoinDesk’s disclosure threshold of $1,000.

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