Market Wrap: Bitcoin Tumbles to $9.8K; Investors Continue Plowing Crypto Into DeFi

Bitcoin price took another dive while DeFi is still looking mighty attractive to investors.

Sep 4, 2020 at 8:36 p.m. UTC

Updated Sep 14, 2021 at 9:52 a.m. UTC

cdbpisep4 — CoinDesk 20 Bitcoin Price Index

Bitcoin is in bear territory for the third straight day and investors are still looking to DeFi to capture gains during the dump.

Bitcoin (BTC) trading around $10,606 as of 20:00 UTC (4 p.m. ET). Slipping 0.90% over the previous 24 hours.
Bitcoin’s 24-hour range: $9,894-$10,081
BTC below its 10-day and 50-day moving averages, a bearish signal for market technicians.

Bitcoin’s price dropped below $10,000 Friday, sliding as low as $9,894 on spot exchanges such as Coinbase.

“It’s not the best look for BTC from a momentum and positive volume standpoint, to be honest,” said Constantine Kogan, partner at crypto fund of funds BitBull Capital.

David Lifchitz, chief investment officer for crypto quantitative firm ExoAlpha, says traders are taking profit after bitcoin could not get past $12,100. It may seem like a long time ago but the price went as high as $12,058 only Tuesday.

“It looks like some bitcoin holders decided that this last failed breakout was one too many,” he told CoinDesk. “A full move could potentially bring the price back toward $9,500.

Lifchitz added that a few more fundamental factors that might be influencing the bearish bitcoin run.

“We observed that the market started to fade as South Korea’s largest exchange, Bithumb, had been raided by police,” he noted.

“It could also be miners deciding to monetize their rewards,” Lifchitz added. Indeed, bitcoin holders, which could include larger holders such as miners, are pushing more inflows into exchanges to its highest levels since late July.

“In my opinion, this is a classic case of an overstretched market, which had advanced too much too quickly, and so was in dire need of consolidation,” said Jean-Marc Bonnefous, managing partner of multi-asset manager Tellurian Capital. “Crypto is dropping in sympathy with other traditional risk assets,” he added.

Equities indexes were in the red Friday:

Asia’s Nikkei 225 closed down 1.1% as major stocks in the pharmaceuticals, consumer staples and technology sectors fell.
Europe’s FTSE 100 ended the day slipping 0.88% as Bank of England officials forecast an economic downward trend for the balance of 2020.
The United States’ S&P 500 lost 0.50% after the index fell as low as 3.1% in early trading on dropping tech sector stocks but rallied later, with the banking sector eking out gains.

Alessandro Andreotti, an Italy-based crypto over-the-counter trader, is optimistic despite the currency cryptocurrency market environment. “Bitcoin has been extremely oversold. It actually reminds me of the March crash,” he said. “But, honestly, I think it can bounce back after this drop.”

More crypto locked in DeFi

Ether (ETH), the second-largest cryptocurrency by market capitalization, was down Friday, trading around $392 and slipping 2.5% in 24 hours as of 20:00 UTC (4:00 p.m. ET).

Yields in DeFi may become important to crypto traders should the market continue to show bearish signals: Ether locked in DeFi is up, from 5 million to 6.9 million in the past week, a 35% increase.

Investors also continue to lock bitcoin into decentralized finance. There are now over 74,000 BTC in use on Ethereum as those who lock in bitcoin gain a yield or profit in the DeFi ecosystem. In the past week, the amount of bitcoin in DeFi has increased 33%.

“An amazing amount of BTC is locked into DeFi, earning hodlers ‘dividends’ for simply owning the asset,” noted Henrik Kugelberg, a Swedish crypto over-the-counter trader.

Other markets

Digital assets on the CoinDesk 20 are almost all in the red Friday. Notable winners as of 20:00 UTC (4:00 p.m. ET):

eos (EOS) + 4.5%
neo (NEO) + 0.22%

Notable losers as of 20:00 UTC (4:00 p.m. ET):

tron (TRX) - 23.9%
nem (XEM) - 12.3%
zcash (ZEC) - 8.9%

Commodities:

Oil is down 4.2%. Price per barrel of West Texas Intermediate crude: $39.50.
Gold is in the green 0.25% and at $1,935 as of press time.

Treasurys:

U.S. Treasury bonds yields all climbed Friday. Yields, which move in the opposite direction as price, were up most on the 10-year, in the green 11.2%.

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