Bitcoin BTCUSD –3.99% and the broader cryptocurrency market are experiencing a significant selloff, raising concerns and speculations about the cause behind this abrupt downturn. As Bitcoin and other digital assets plummet through crucial support levels, one name is repeatedly surfacing as a potential catalyst for this downturn—Elon Musk.
Over the past 24 hours, the price of Bitcoin has dropped by 7%, hitting a low of $26,550, the lowest point since mid-June. Just a week ago, Bitcoin was trading near $29,500, in a range that had remained relatively stable for several weeks. This stability was in stark contrast to the turbulence observed in the stock market, where the Dow Jones Industrial AverageDJIA –0.84% and S&P 500SPX –0.77% have experienced notable fluctuations. Traders had anticipated an end to the low volatility period, but the extent of the recent downside move has caught many off guard.
Andrew Lawrence, CEO of custody group Censo and a former partner at crypto hedge fund Pantera Capital, shared his perspective on the situation, stating, “Bitcoin has plunged in recent days, and I think we could have further to fall. Volumes are just really low and retail buyers are certainly not yet entering the market in a substantial manner.”
The cryptocurrency market’s decline has triggered turmoil in the crypto derivatives space, especially in Bitcoin perpetual futures, which represents one of the most liquid markets within the digital asset realm. In the past 24 hours, nearly $500 million worth of bullish Bitcoin bets have been liquidated on exchanges, making this one of the largest futures losses this year.
While various factors could be contributing to this downturn, the spotlight has turned to Elon Musk. The Wall Street Journal reported that Musk’s private space exploration company, SpaceX, had devalued its Bitcoin holdings by $373 million in 2020 and 2021 and subsequently sold off the cryptocurrency. This move has raised questions about Musk’s influence on the market and whether his actions have contributed to the ongoing sell-off.
Antoni Trenchev, co-founder and managing partner at crypto lender Nexo, commented on the situation, saying, “SpaceX’s writedown of crypto-assets has everyone pointing the finger at Musk for Bitcoin’s plunge. Elon has always had an outsized hand in crypto markets.”
With Bitcoin now trading below several crucial technical levels, market participants are closely monitoring the price action to gauge the potential for further losses. All eyes are on whether Bitcoin can regain its 200-week moving average, which currently stands around $27,400.
Trenchev shared his insights into the technical aspects of the market, stating, “It doesn’t look good that Bitcoin has dropped below its 20-, 50- and 200-day moving averages, and now you’d want it to stay above the last big mid-June low of $24,800. If $24,800 doesn’t hold, you are looking at $23,000 and then $20,000 comes into play.” A further drop to $20,000 would represent a decline of approximately 25% from the current levels.
In addition to Bitcoin’s woes, Ether—the second-largest cryptocurrency—has also experienced a 6% drop, falling below $1,700. Other smaller tokens and altcoins have followed suit, with Cardano and Polygon both witnessing declines of 4% and 6%, respectively. Memecoins, including Dogecoin DOGEUSD –4.71% and Shiba Inu, have also faced losses of 7% and 6% respectively, in this broader market downturn.
