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Bitcoin Tumbles Most Since May and El Salvador Buys the Dip
Price drop triggers about $3 billion of liquidations of trading positions due to margin calls.
Bitcoin tumbled 11.3%, the most since May, leading a broad retreat from digital assets even as bullish investors touted El Salvador’s adoption Tuesday of the largest cryptocurrency as legal tender.
As of press time bitcoin was changing hands around $46,7561, down from over $52,000 earlier in the day. At one point during the selloff the largest cryptocurrency tumbled as low as $42,900.
STORY CONTINUES BELOW
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The “[market] had been getting ahead of itself, lots of complacency,” Fredrick Collins, an options trader and researcher at Glassnode, told CoinDesk.
The sell-off triggered liquidations of billions of dollars of trading positions due to margin calls, across both centralized and decentralized exchanges. According to the website Bybt, about $3 billion of liquidations were recorded in the past four hours.
One perspective is that the correction might help to reset cryptocurrency markets, with excessively leveraged trading positions getting shaken out.
“This was a healthy event today,” Collins said.
All major cryptocurrencies were in the red.
Ether, the native cryptocurrency of the Ethereum blockchain, tumbled 20% to $3,138, while Cardano’s ADA token lost 23%. Uniswap’s UNI token fell 27% and XRP was down 28%.
El Salvadorian President Nayib Bukele, whose push to adopt bitcoin as legal tender took effect this week, tweeted that he was “buying the dip” with “150 new coins added.“
Buying the dip 😉
— Nayib Bukele (@nayibbukele) September 7, 2021
150 new coins added.#BitcoinDay #BTC🇸🇻
In traditional markets, U.S. stocks fell as investors returned from the three-day Labor Day holiday weekend. Stocks had traded near all-time highs last week and, according to Bloomberg, investors showed fresh signs of caution due to prospects for a growth slowdown amid spreading Delta variant cases of COVID-19.
The U.S. dollar rose in foreign exchange markets. The yield on 10-year U.S. Treasury bonds increased 0.05 percentage point to 1.37%.
CoinDesk’s Omkar Godbole contributed to this report.
Bradley Keoun
Bradley Keoun is CoinDesk's managing editor of tech & protocols, where he oversees a team of reporters covering blockchain technology, and previously ran the global crypto markets team. A two-time Loeb Awards finalist, he previously was chief global finance and economic correspondent for TheStreet and before that worked as an editor and reporter for Bloomberg News in New York and Mexico City, reporting on Wall Street, emerging markets and the energy industry. He started out as a police-beat reporter for the Gainesville Sun in Florida and later worked as a general-assignment reporter for the Chicago Tribune. Originally from Fort Wayne, Indiana, he double-majored in electrical engineering and classical studies as an undergraduate at Duke University and later obtained a master's in journalism from the University of Florida. He is currently based in Austin, Texas, and in his spare time plays guitar, sings in a choir and hikes in the Texas Hill Country. He owns less than $1,000 each of several cryptocurrencies.
