Cryptocurrency Prices Slide as Bitcoin ETF Delayed
Cryptocurrency prices continued to slide lower on Friday as the realization that there is unlikely to be any movement on the spot Bitcoin (BTC) exchange-traded fund (EFT) front until at least October. The delay has led many to exit the market amid increasing weakness.
Stocks were mixed after August payroll data showed an unexpected jump in U.S. unemployment, with the economy adding 187,000 jobs, compared to 170,000 expected, while the unemployment rate rose 3.8% versus the 3.5% expected. Analysts suggested these figures are likely to add to the uncertainty around the Federal Reserve’s future path of interest rates.
Bitcoin Bears Overwhelm Bull Support
Data provided by TradingView shows that Bitcoin bears managed to overwhelm bull support at $26,000 near midday, pounding the top crypto to a daily low of $25,315 in the afternoon and looking to push it even lower as the weekend approaches.
“September Bitcoin futures prices [were] near steady in early U.S. trading Friday, after posting sharp losses Thursday,” according to Kitco senior technical analyst Jim Wyckoff. “Bears have gained momentum and strength late this week,” Wyckoff said. “A price downtrend line is in place on the daily chart. The bears still have the overall near-term technical advantage and would gain more power by pushing prices to new for-the-move lows and producing a bearish downside ‘breakout’ from the recent trading range.”
Shortage of Liquidity
According to David Lifchitz, managing partner and chief investment officer at ExoAlpha, the main issue the cryptocurrency market is facing is a shortage of liquidity. Lifchitz explained that the liquidity seen in 2021 and 2022 was brought by large institutions diving into cryptos. However, after the 2022 bear market and the failure of FTX, institutional investors turned cold feet, leading to the lack of liquidity in the market.
Lifchitz also mentioned that the infrastructure risk and increased regulatory uncertainty played a part in institutional investors exiting the market. Until liquidity comes back and institutional investors return, the crypto market is not expected to improve.
Hopes for Institutional Investors
Lifchitz stated that in order for institutional investors to return, they need to see a more robust infrastructure, more clarity on the regulatory front, and the potential for double-digit returns in a short period of time. While the approval of a spot Bitcoin ETF may generate some interest in the short term, it may not last long if institutional investors don’t embrace the asset class again.
Despite the uncertainty, some analysts remain optimistic about the future of Bitcoin. Michaël van de Poppe, founder of MN Trading, noted that September historically has been a weak month for Bitcoin and risk assets. However, he also mentioned that after a weak September, Bitcoin has had a strong Q4 in the past, indicating a potential opportunity for investors.
Market Recap
Roughly a dozen tokens in the top 200 managed to post positive gains on Friday, while the rest finished the week in the red. CyberConnect (CYBER) led the gainers with an increase of 54.55%, followed by Toncoin (TON) with a 13.24% gain and API3 (API3) with a 7.7% increase. On the other hand, UniBot (UNIBOT) was the biggest loser, falling 14.4%, and JOE (JOE), yesterday’s biggest gainer, declined by 10.4%. The overall cryptocurrency market cap now stands at $1.03 trillion, with Bitcoin’s dominance rate at 48.3%.
