Bitcoin is the ultimate risk metric for Wall Street
Add Axios as your preferred source to
see more of our stories on Google.
Bitcoin was under pressure again on Monday, proving its tepid recovery last week would be difficult to sustain amid over $1 billion in forced liquidations within 24 hours.
Why it matters: Crypto is proving to be the ultimate risk-on asset, falling first and hardest at seemingly any sign of trouble across markets.
Catch up quick: The latest bitcoin plunge came overnight Sunday, sparked by jitters over the yen carry trade.
- That slide carried into U.S. trading on Monday, when it triggered roughly $1 billion in forced liquidations across crypto and sparked fresh concerns of selling from battered bitcoin treasury companies.
By the numbers: Bitcoin fell more than 7% over 24 hours as of Monday afternoon, trading back at under $85,000, essentially erasing its small recovery that started on Nov. 2.
- Bitcoin is down nearly 32% from its record high of $126,080 on Oct. 6.
What they're saying: "It's probably one of the most susceptible (assets) to risk-off catalysts," Nic Puckrin, investment analyst and cofounder of Coin Bureau, tells Axios, explaining bitcoin's softness over the past few months.
State of play: A few factors are adding to its recent sensitivity.
- Forced liquidations — when a trader's position is automatically closed by an exchange due to collateral falling below a required margin threshold — has sapped the crypto market of liquidity, which exacerbates the impact of negative headlines, Puckrin notes.
- There also has not been much buying from ETFs and crypto treasury companies lately, which had been supplying new demand this year.
What to watch: The key level to watch for bitcoin is $82,000, Puckrin says.
- That is the number widely cited as the average cost-basis "cluster" for many ETF investors and bitcoin treasury companies. If we cross that, there is likely to be a lot more talk of bears across the crypto market.
