Bitcoin and Ethereum fell sharply on Monday, as the recent sell-off in cryptocurrencies resumed.
Bitcoin tumbled sharply and was last seen around $86,435 at 11:30 a.m. in London (6:30 a.m. ET), a slide of 5.4%. Ethereum dropped around 6.1% in early trade, to reach $2,843.
Solana had fallen over 7%, and was last seen around $127, while other closely-watched tokens were also in the red, including Dogecoin, which slipped around 8.6%.
BTC.
In Asia, a statement by the People’s Bank of China on Saturday warning of illegal activities relating to digital currencies heaped pressure on Hong Kong-listed shares of digital assets-related companies, which retreated during Monday’s session.
The fresh slide in digital assets chimes with a broader risk-off sentiment at the start of a new month.
Ben Emons, founder and CIO of Fedwatch Advisors, said that people remain “nervous” following the recent Bitcoin sell-off, adding that Monday’s reversal has broadly been attributed to a $400 million exchange liquidation.
Speaking with CNBC’s “Squawk Box Europe” on Monday, he highlighted the sizable leverage across Bitcoin exchanges, which is up to 200x in some instances. With an estimated $787 billion outstanding leverage in perpetual crypto futures, against some $135 billion outstanding in ETFs, “you can do the math,” Emons said.
“There is still a lot of leverage in Bitcoin out there. We can expect to some more of these liquidations if Bitcoin prices don’t get off the lows from here,” he added.
Monday’s dip came on the back of a sharp sell-off in October, which also moved the stock market, Emons said, with Bitcoin showing greater correlation with certain indexes including the Nasdaq.
“It’s predominantly retail driven, that’s the worrying part of it, because retail reacts very differently than institutional [investors],” he said, noting the decentralized nature of crypto exchanges, and opaque nature of the asset class.
“That is something to reckon with going forward from here, as more and more leverage is used in this space.”
Macroeconomic concerns — including uncertainty over a possible U.S. rate cut — continue to weigh on investors’ minds, while nagging doubts over overheated valuations in artificial intelligence-related names contributed to November’s bumpy markets as crypto volatility heightened.
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