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Bitcoin is stuck around $10,000 with little price action while some ether holders have pulled out of the DeFi ecosystem.
Scant action in the bitcoin market over the weekend was a welcome respite from the downward trend since the start of September, when prices hit as high as $12,083 on spot exchanges such as Coinbase.
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“The important thing is that we’ve held the $10,000 mark, and I’d expect we re-build slowly from here,” said Chris Thomas, head of digital assets for Swissquote Bank.
Rupert Douglas, head of institutional sales for crypto brokerage Koine, isn’t ruling out a further drop. “It’s tough right now to say how far BTC retraces,” he told CoinDesk. “My concern is around equities, where I believe tech is in a bubble not dissimilar to 2000,” he added.
The equities markets are mixed Tuesday, with some hopeful numbers out of Asia while the European and U.S. markets are tanking.
“I think we are going to see significantly lower equity prices soon, but will BTC be correlated as it was the last time when equities lurched lower in February and March? That is the question,” added Koine’s Douglas.
Over the past month, bitcoin dropped over 13% while stock indexes, aided by the tech sector and various stimulus packages by governments, have been holding up better than the bellwether cryptocurrency.
In the derivatives markets, open interest in bitcoin futures have declined to the lowest level since early July, currently around $3.7 billion.
“Bitcoin futures volumes have been lower the last few days, partly because of the U.S. Labor Day weekend, but also we reverted more towards average volume days after having some large days last week,” added Swissquote’s Thomas. Indeed, this past Tuesday, volume spiked at $5.1 billion before dropping off.
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While bitcoin was relatively quiet over the long U.S. weekend, decentralized finance, or DeFi, again stole the show in crypto surrounding the SushiSwap project, drama that Thomas hopes can fade quickly. “To me, it’s important we just hold steady for a while and the DeFi space has a calm few weeks with no more crazy unaudited projects causing problems,” added Thomas.
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The second-largest cryptocurrency by market capitalization, ether (ETH), was down Tuesday, trading around $336 and slipping 3.3% in 24 hours as of 20:00 UTC (4:00 p.m. ET).
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For the first time in data aggregator DeFi Pulse’s charts, the total value locked in DeFi has decreased. The amount locked surpassed $9.5 billion on Sept. 1, fell almost $2 billion by Sept. 5 and then recovered slightly.
“This is probably caused by the drop in [the] ETH price,” said Jun Yi, a Singapore-based DeFi yield farmer. “ETH dropped around 30%. There is a cascading effect,” he added.
It appears that ether holders in particular started pulling out, with over 440,000 ether “unlocked” Sept. 4-5 after a slight recovery.
On the other hand, the number of bitcoin locked in DeFi is still trending up, crossing the 80,000 BTC threshold on Tuesday.
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Digital assets on the CoinDesk 20 are mixed Tuesday. Notable winners as of 20:00 UTC (4:00 p.m. ET):
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Notable losers as of 20:00 UTC (4:00 p.m. ET):
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