Bitcoin has pulled back from 2020’s highs while ether slips as DeFi cools off.
Bitcoin’s price had a minor pullback Friday after hitting fresh new 2020 highs that put it above $13,000 in the past week. However, analysts and traders said they were not surprised at all by the recent moves.
An immediate sell-off by long-time bitcoin holders when prices hovered around $13,000 could be why bitcoin struggled to maintain its rally, according to on-chain data site Santiment.
Bitcoin’s dormant circulation, which tracks the activity of bitcoin that were previously unmoved for at least one year, has recorded the biggest spike since Feb. 7, 2020, Santiment’s data shows.
“A renewed activity of long-term BTC investors often means increased price volatility up ahead,” Dino Ibisbegovic, market analyst at Santiment, told CoinDesk. “Similar spikes – particularly during price rallies – have typically earmarked periods of price consolidation or short-term corrections in the past.”
Darius Sit, founder of Singapore-based QCP Capital, told CoinDesk the market may expect further pullback over the weekend, noting that the TD Sequential indicator has been able to signal a reversal for bitcoin prices.
On the other hand, growing open options interest may support a pricing floor for bitcoin above $12,500, said Guy Hirsch, managing director of U.S. for eToro, in an email to CoinDesk.
“That price point has long been seen as the glass ceiling that needed to break for BTC to make any significant moves upward,” Hirsch said. “Given the positive sentiment off the back of yesterday’s PayPal news, I would not be surprised to see bitcoin challenged and move back past $13,000 in the near future.”
Additionally, significant institutional interest in cryptocurrency has continued to grow. That is evidenced by the fact that this week the tCME, an exchange predominantly led by institutional participation, has surpassed both Binance and BitMEX to be the second-largest bitcoin futures platform by number of open contracts.
“The PayPal news is the bright and shiny object this week, but it is just the tip of the iceberg,” Matt Hougan, global head of research at Bitwise Asset Management, told CoinDesk. “Behind the scenes there has been a sea change in the attitudes of institutional investors, broker-dealers and financial advisers toward crypto in the past few months.”
“We’re in a legitimate bull market right now,” he added.
The second-largest cryptocurrency by market capitalization, ether (ETH), was down Friday trading around $409.05 and slipping 1.78% in 24 hours as of 20:00 UTC (4:00 p.m. ET).
Priced in bitcoin, the token started to reverse some of the gains made mid-Thursday when ETH/BTC spiked 4% in two hours, down 2% from the daily high and trading at 0.0317 BTC per ether and continuing the downward trend since the week’s open for bitcoin-based trading pair.
Ether’s decline against bitcoin may signal a continued cooling of alternate cryptocurrencies (altcoins). Taking to Twitter, leading markets data provider Skew noted ether’s downward trend, asking rhetorically, “Altseason on pause?”
Decentralized finance (DeFi) led the summer’s surge in altcoin returns, and plummeting decentralized exchange (DEX) trading volumes corroborate a potentially significant waning of speculative interest in altcoins, especially DeFi-focused assets. The 30-day trailing volume for leading DEXs is down 41%, according to data from Dune Analytics.
Digital assets on the CoinDesk 20 are all red Friday. The bigger losers as of 20:00 UTC (4:00 p.m. ET):
- U.S. Treasury bond yields went down Friday. Ten-year yields, which move in the opposite direction as price, were down to 0.85.