Traders were in the red Monday as $1.62 billion in bullish bets evaporated over the past 24 hours, according to data from the crypto analytics company Coinglass. Correspondingly, the crypto markets were down, as Bitcoin dropped 2.3% over the past 24 hours to below $113,000, per Binance. Ethereum, the second largest digital asset by market capitalization, had an even starker drop of almost 7% to just under $4,200. The total market capitalization of all cryptocurrencies was down almost 4% day-over-day to about $3.9 trillion, per CoinMarketCap.
William Cai, global head of crypto data at the crypto analytics company Kaiko, said the decline in crypto prices was “likely due to [the] unwinding of leverage post the Fed rate decision.” He also said that weekends historically have smaller trading volumes, which “magnified” the market decline.
The drop in the crypto market runs counter to a small Monday upswing in stocks, as the S&P 500 gained 0.15% after markets opened.
“A tone of bearish exhaustion has begun to set in,” Gordon Grant, portfolio manager and head of derivatives at the crypto asset management firm Bitwise, told Fortune, referring to the crypto markets. He pointed to Bitcoin’s Monday drop below the cryptocurrency’s 50-day moving average of about $115,000 as a sign of that fatigue.
Bitcoin’s Monday dip follows a month of low volatility for the world’s largest cryptocurrency, despite record highs in the stock market amid a long-anticipated rate cut from the U.S. Federal Reserve Board.
The cryptocurrency last notched an all-time high in mid-August after the Bureau of Labor Statistics released rosier-than-expected inflation data that onlookers hoped would prompt the Fed to cut interest rates. Rate cuts historically encourage traders to pile into riskier bets, like crypto or stocks.
But, since then, Bitcoin has generally traded around $115,000, even as the S&P 500 repeatedly set records in late August through September. After the Fed cut rates on Wednesday, the crypto markets did jump, and Bitcoin rose to as high as almost $118,000, but it soon fell off over the weekend.
Grant, the Bitwise portfolio manager, said another reason for the recent stagnation in price of the world’s largest cryptocurrency stems from the rise of Bitcoin digital asset treasury companies, or public firms who stockpile crypto onto their balance sheets to juice their share prices.
“It may require an increasingly willing suspension of disbelief for the market to remain optimistic about just how much Bitcoin these relatively newer players can afford to buy,” he said.
