Both Bitcoin and Ethereum traded up Tuesday with ether trading back above $1600. The biggest drop in crypto-related stocks has been since August 19, when markets began to fall. The crypto markets showed signs that they were recovering after a sharp selloff on Friday.
As usual, Tuesday’s big winner was ether, which gained over 4.2% in the last 24 hours, trading at $1.644. CoinGecko reported that bitcoin traded at $21,541 and was up 1.9%.
EOS, which gained more than 17% after the Block.one court settlement last week, has maintained its momentum despite the selloff. It traded for $1.79, up 40.1% in the past week.
Here are the reasons for last week’s sell-off by key players and commentators
On Tuesday, the global crypto market cap fell below $1 trillion but then recovered to $1.08 trillion. This is a 2.5% gain over the last 24 hours. After a sharp drop in the prices of digital assets, the market cap touched \$1 trillion for the first time on Saturday.
21Shares suggested that a large number of long-liquidations could have contributed to the decline in the crypto market. The asset manager wrote Tuesday:
According to Coinglass data, more than 157K traders were liquidated on Friday. This resulted in total liquidations exceeding $600M [million].] Bitcoin traders lost more $239M while Ethereum lost more $224M. This liquidation marks the largest liquidation of long futures positions since June 13th, just days before bitcoin fell below $20K span> .
Other market commentators attribute Friday’s plunge in prices to widespread risk aversion.
BlockFi reported Monday in its weekly market update that Friday’s meeting in Jackson Hole of Federal Reserve officials would be the “key events for the week.” As traders monitor Fed signsposting for future rate increases, which has pushed crypto markets all summer, traders will keep an eye out for Fed signals.
LedgerPrime also shared similar sentiments in Tuesday’s market update. It noted that investors are “worried about further aggressive interest rates” and “a slowing economic environment, driving them to sell assets they consider risky like tech or crypto and purchase the US dollar.”
According to the crypto investment firm, “as traders’ appetite for risk assets continues its collapse across the board,
Over the last five days, crypto-related stocks (those with exposure to cryptocurrency on their balance sheets or business models closely tied to blockchain technology) have been hit twice as hard.
Both digital assets and equities have seen a significant sell-off since August 18. The S&P 500 has fallen 3.76%, while the Nasdaq 100 is down 4.65%. On Tuesday, Block, MicroStrategy and Coinbase all closed.
Coinbase has lost 14.7% since August 18th, Jack Dorsey’s Block lost 11%, and MicroStrategy lost almost 18%.
