Crypto markets showed signs of recovering at the top of the week following a sharp sell-off last Friday.
As has been the theme of the month so far, ether was the big winner on Tuesday as it gained more than 4.2% over the past 24 hours trading at $1,644. Meanwhile bitcoin was up 1.9% trading at $21,541, according to CoinGecko.
Elsewhere, EOS – which jumped over 17% following court ruling on the Block.one settlement last week – has maintained its momentum despite the sell-off, now up 40.1% over the past week, trading hands for $1.79.
Here’s what commentators and key players have suggested as a reason for last week’s sell-off.
Marco outlook and liquidations blamed for crash
The global crypto market cap briefly dipped below $1 trillion on Tuesday before recovering to $1.08 trillion – a gain of about 2.5% over the past 24 hours. The market cap first flirted with the $1 trillion mark on Saturday following a dramatic drop in digital asset prices.
21Shares suggested a raft of long-liquidations may have caused the downtrend in the crypto market, the asset manager wrote on Tuesday:
“According to data gathered by Coinglass, over 157K traders got liquidated on Friday, resulting in total liquidations of over $600M [million]; bitcoin traders lost over $239M, while Ethereum lost over $224M. With around $562M worth of long positions and $79M in shorts, this marks the biggest liquidation of long positions on futures since June 13, a few days before bitcoin’s price fell below $20K.”
Meanwhile other market commentators have attributed the plunge in prices on Friday to a widespread risk aversion in the market.
BlockFi wrote in its weekly market report on Monday that the meeting of Federal Reserve officials in Jackson Hole on Friday would be the “key event for the week,” as traders watch out for Fed signposting on future rate hikes – which have moved crypto markets throughout the summer.
LedgerPrime shared similar sentiments in its weekly market update on Tuesday, noting that investors “seem worried about further aggressive interest rates and a slowing economic backdrop, driving them to sell assets seen as risky such as tech or crypto, and buy the US dollar.”
The crypto investment firm went on to say, “as trader’s appetite for risk assets continues to collapse across the board, the US dollar seems to gain speed, setting track for its highest week in value in over 20 years.”
Double trouble for crypto stocks
Crypto-related stocks – those with exposure to cryptocurrencies on their balance sheet or with business models closely linked to blockchain technology – have suffered twofold over the past five days.
Digital assets and equites have both seen a large sell-off since August 18, with the S&P 500 and the Nasdaq 100 down 3.76% and 4.65% in that time. Coinbase, MicroStrategy and Block all closed on Tuesday.
Since the close on August 18, Coinbase lost 14.7%, while Jack Dorsey’s Block lost 11% and MicroStrategy shed almost 18%.
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