Bitcoin prices have failed to rally after their recent losses. (Photo by INA FASSBENDER / AFP) … [+]
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Bitcoin prices pushed lower today, building upon the notable declines they experienced the day before.
The digital currency fell below $35,400 today on TradingView, at which point it reached its lowest point since February.
The cryptocurrency then recovered slightly, climbing to roughly $36,400, additional TradingView figures show.
Since that time, the digital asset has experienced modest volatility, trading close to $36,000 at the time of this writing.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Myriad Price Drivers
When explaining the latest price movements in bitcoin, analysts cited several factors, including the potential capitulation of investors and the significant correlation the digital currency has had with other risk-on assets as of late.
“Digital assets are moving very much in tandem with other risk assets as volatility continues to be an issue,” said Martha Reyes, head of research at digital asset prime brokerage and exchange Bequant.
Tim Enneking, managing director of Digital Capital Management, also spoke to this development.
He emphasized that when bitcoin prices declined yesterday, there was a “huge drop” in fiat markets, particularly U.S. stock markets that trade during Eastern Standard Time, “coupled with the all-to-high BTC correlation with fiat markets.”
Capitulation
Several analysts spoke to potential capitulation, meaning robust selling activity that helps drive asset prices lower.
Panic selling frequently drives this kind of activity, as investors lose hope that their assets will rise in value.
JJ Kinahan, vice president and chief market strategist of financial network tastytrade, commented on the situation.
“As we continue to see Crypto, in line with stocks having a second day of losses, it brings to mind a few quick points,” he stated.
“The first one is yes there could be some capitulation in the Market,” said Kinahan.
“However, there is something I believe that is bigger going on here, that is we are seeing a ‘lack of buyers’ overall and so it may not be a deluge of sellers as much as there is not a lot of conviction in buying,” he claimed.
“This is particularly interesting in Bitcoin, as many have viewed it as a place to turn in times of uncertainty and Inflation, similar to how many have traditionally viewed Gold.”
Reyes also weighed in on what she described as capitulation in the market, but offered a different take on the situation.
She focused on investors’ use of debt, emphasizing how deeply the global financial system has come to rely on it.
“The economy has never been so leveraged,” said Reyes, stating that as a result, “we are hostage to the historic bond moves and risks remain.”
“Crypto traders bought the fake rally on Wednesday,” she stated.
“Open interest increased but then got liquidated the next day as markets sold off,” the analyst noted.
“However, we have seen moments of worse capitulation in previous corrections so wouldn’t say we are out of the woods.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.
