There was red ink across the crypto market Monday morning in Asia as Bitcoin dipped below the resistance level of US$26,000. Ether also fell to near the US$16,000 mark after a hack on the X account of Ethereum founder Vitalik Buterin. Other top 10 non-stablecoin cryptocurrencies logged losses. Solana’s SOL led the losers with a 24-hour slide of over 6%. Bankrupt crypto exchange FTX could soon get the greenlight to liquidate its US$3.4 billion in crypto holdings, adding to selling pressure in the market. U.S. stock futures traded higher after Wall Street logged weekly losses Friday. Investors now look ahead to the release of more U.S. inflation data later in the week for clues on upcoming interest rate policy.
Latest FTX news depresses crypto market
Bitcoin dipped 0.25% in the last 24 hours to US$25,831.97 as of 07:50 a.m. in Hong Kong. It lost 0.53% for the week, according to CoinMarketCap data. The world’s leading cryptocurrency briefly traded above US$26,000 last Friday. But it soon lost that support level and remained range bound over the weekend at around US$25,900.
Ether, the Ethereum blockchain’s native token, fell 1.12% to US$1,616.79, and dropped 1.18% over the past seven days.
Ethereum founder Vitalik Buterin’s account on X, formerly Twitter, was hacked Sunday, leading to losses totalling around US$691,000 for some of Buterin’s followers, according to blockchain investigator ZachXBT. Hackers posted links to a scam non-fungible token (NFT) project on Buterin’s Twitter page, advising users to connect their crypto wallets before withdrawing the funds.
Buterin’s father confirmed in a tweet Sunday that his son had been hacked and was restoring his X account. The alleged scam post has now been removed from the account. Buterin himself is yet to comment on the hack.
All other top 10 non-stablecoin cryptocurrencies posted losses in the past 24 hours. Solana led the losers, falling 6.17% to US$18.25 for a weekly loss of 6.80%.
On Sunday, a Wall Street Journal report predicted a September pause in the U.S. Federal Reserve’s interest rate hiking cycle. The report “probably had many investors re-thinking their valuations — not just for crypto but for risk assets in general,” said Justin d’Anethan, head of Asia-Pacific business development at Belgium-based crypto market maker Keyrock.
The market is also facing downward pressure from the latest FTX news. The collapsed cryptocurrency exchange is likely to receive approval on Sept.13 to start liquidating its crypto holdings, according to a tweet Saturday from blockchain analysts Whale Alert.
After filing for bankruptcy in November 2022, the exchange still holds an estimated US$3.4 billion worth of crypto assets. Part of the bankruptcy plan set up for the firm allows for the sale of up to US$100 million in crypto assets per week, which can be extended to US$200 million under certain circumstances.
Crypto analysts suggest the news could weigh on the market after gains earlier in the summer. Blockchain research firm IntoTheBlock tweeted Sunday that “despite positive news about Visa and a potential spot ETH ETF, FTX’s impending US$3 billion liquidation could be dictating market movement.”
The selling pressure from FTX will cause altcoins to underperform Bitcoin throughout the remainder of the year, Markus Thielen, head of research & strategy at digital asset service platform Matrixport, said in a Sunday LinkedIn post.
The potential selling of FTX’s crypto holdings could hit Solana particularly hard, according to Rachael Lucas, crypto technical analyst at Australia-based crypto exchange BTC Markets. The token “forms a substantial portion of these assets, with an estimated value of approximately $685 million. This impending event has heightened the sense of uncertainty among SOL investors.”
Meanwhile, Bitcoin is on the verge of a “death cross” — where the token’s short-term, 50-day Simple Moving Average (SMA) moves below its long-term, 200-day SMA. That could signal a coming slide in Bitcoin prices, Lucas said.
As of 09:50 a.m. in Hong Kong, Bitcoin’s 50-day SMA sat at US$27,658.19, with a 200-day SMA of US$27,608.57. Following the previous Bitcoin death cross on Jan.14, 2022, the token’s price dropped over 10% within seven days.
“The looming question that occupies the minds of market participants pertains to whether Bitcoin will chart a similar course in response to this bearish technical pattern or has the market already priced in this event?” Lucas said.
“This uncertainty is exacerbated by the forthcoming release of U.S. inflation figures, with technical indicators currently signalling the potential for further downside,” she added.
The total crypto market capitalization dropped 0.74% in the past 24 hours to US$1.04 trillion. Trading volume rose 50.61% to US$20.25 billion.
Investors await key US inflation data as China slump slows
U.S. stock futures edged up as of 11:00 a.m. in Hong Kong. All three major U.S. indexes closed moderately higher on Friday but logged weekly losses. The Dow Jones Industrial Average led the winners on Friday with a 0.22% uptick, but ended the week 0.86% lower.
The main stock indexes in Asia were mixed on Monday morning. China’s Shanghai Composite and South Korea’s Kospi moved higher. Hong Kong’s Hang Seng dropped 1.38% while Japan’s Nikkei 225 also posted a 0.19% loss.
The U.S. consumer price index (CPI) for August will be released on Wednesday. Analysts expect the inflation gauge to rise 3.8% year-on-year, up from 3.2% in July, according to the Federal Reserve Bank of Cleveland last Friday.
“My expectation is that the CPI print could come in higher than expected (with) the price of oil pushing higher,” Phil Blancato, chief executive officer of U.S.-based investment advisory firm Ladenburg Thalmann Asset Management, said in the report.
“We have a problem where ultimately the Fed may be pushed into a corner, and while they might take a pause because of the lag effect, I don’t think they’re done,” said Blancato.
The CPI prediction of 3.8% is still higher than the Federal Reserve’s long-term goal of reducing the annual inflation rate below 2%. The Fed raised the interest rate in July to between 5.25% and 5.50%, the highest level since early 2001.
The U.S. CPI data on Wednesday is unlikely to affect Fed thinking ahead of its September meeting, Mohamed A. El-Erian, an adviser to Germany-based financial services firm Allianz, tweeted on Monday. But it could influence future rate decisions, beginning November, he said.
The CME FedWatch Tool predicts a 93% chance the central bank will maintain the current rate unchanged in September. It gives a 53.5% chance for another pause in November, down from 57.4% last Friday.
Meanwhile, China’s CPI index posted a slim annual increase of 0.1% in August. The increase has eased deflationary pressure on Beijing slightly
“Many data we’re seeing now shows that the economy’s slump may be slowing in the coming months,” Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd., told Bloomberg. Yeung also noted a slowdown in China’s export slump in August. But he said the slowdowns should not be read as a sign of long-term recovery just yet.
“It will be more of a stabilization instead of a complete rebound,” Yeung said.
(Updates with equity section.)