Leading cryptocurrency, Bitcoin extended losses on Tuesday, falling to the lowest level since August after a global selloff in riskier assets took the overall value of the cryptocurrency market back below $2 trillion.
The largest digital coin fell as much as 7.6% to $40,237 before paring some of the decline. It is currently down 6.4% hovering around $42,900 on Binance.
Second-biggest token Ether was trading below $3,000, but now back at slightly over $3,000 while Cardano, Solana, Polkadot and Dogecoin also fell, according to tracker CoinGecko.
Virtual currencies were roiled amid fears of contagion from the liquidity crisis at China Evergrande Group, the world’s most indebted developer, Bloomberg reported.
A global stock retreat abated somewhat in Asia on Tuesday, though Evergrande’s woes and the looming Federal Reserve meeting remain potential triggers of volatility.
“Bitcoin and Ether are getting swept up in the risk-off momentum that has been gaining since late last week,” said Adam Reynolds, chief executive for Asia-Pacific at Saxo Capital Markets Pte. He expects “more liquidation to come.”
Bitcoin’s plunge brings the lower Ichimoku cloud border into play
About $1.4 billion of cryptocurrency liquidations occurred in the past 24 hours, according to data from Bybt.com. These happen when leveraged positions are closed by exchanges for failing to meet margin requirements.
From a technical perspective based on Bitcoin’s price charts, the token has traced a hammer pattern right above the lower border of a so-called Ichimoku cloud. That suggests the next key support level to watch for is about $39,900.
Katie Stockton, founder of Fairlead Strategies, flagged the same level as a potential support in a note, while adding Bitcoin is still in a long-term uptrend.
Bitcoin is up more than 40% in 2021, while Ether has quadrupled and the wider Bloomberg Galaxy Crypto Index has more than doubled.