Asia’s largest cryptocurrency fell as much as 4.8% as the period of volatility continued.
Bitcoin struggled to hold above the closely watched $20,000 level, extending a period of marked volatility that saw huge weekend swings.
Asia’s largest cryptocurrency fell 4.8 percent to $19,618 on Monday and was trading at $20,036 as of 12:30 p.m. Tokyo time. Ether fell as much as 7.8% but remained above $1,000. Solana, Cardano and Dogecoin are in the red.
Bitcoin fell nearly 15% on Saturday, but then climbed back above $20,000 with a 16% gain. Volatility patterns suggest that investor sentiment remains very fragile as the Fed fights inflation at full speed by raising rates to drain market liquidity.
Arthur Hayes, co-founder of cryptocurrency exchange BitMEX, said on Twitter: “Expect more bitcoin and ether forcible sales as the market figures out who is swimming naked.”
He said he didn’t know if the sell-off was over, but “there may be more opportunities for skilled knife bearers to buy coins from those who have to hit every bid regardless of price.”
Some cryptocurrency executives believe bitcoin below $20,000 could lead to the liquidation of more leveraged positions. The coin is down around 57% since the start of the year, while other coins have suffered even more.
The T3 Bitcoin Volatility Index, which measures a coin’s expected 30-day volatility, has jumped to a 2022 high.
Adding to the uncertainty is the enormous pressure on decentralized finance applications. When pandemic-era stimulus fueled a record cryptocurrency boom, their popularity soared as a source of high yields.
But now they are taking unprecedented steps to protect themselves from cascading liquidations. Troubled crypto lending platform Celsius Network Ltd. said Monday it needs more time to stabilize its liquidity and operations after freezing deposits last week.