A SEA OF RED AS CRYPTOCURRENCIES SLIDE
The price of cryptocurrencies declined sharply overnight. Bitcoin, Ethereum, Ripple, and Litecoin declined by more than 5% each. Bitcoin fell by 400 points while ETH declined by more than 22 points. The market capitalization of cryptocurrencies tracked by CoinMarketCap declined to $185 billion. This was the biggest sell-off in recent months.
Tensions in the market started last week when ADP released jobs numbers for the USA. The numbers showed that the private sector had accelerated gains. This was confirmed on Friday when official government data showed that the unemployment rate had declined to 3.7%. As a result, the US treasuries started a sell off as traders started to worry about rising interest rates. This was coupled with the fiscal problems in Italy. Yesterday, the New York Times wrote that if the trade war continues, China could be forced to stop buying US treasuries.
The decline of the crypto market somewhat erased the thinking that digital currencies could be used as a safe haven in times of increased risks. In the past, crypto enthusiasts have called Bitcoin a digital gold which traders rush to when risks increase.
Yesterday, Hurun published its list of the richest people in China. For the first time, it showed that eight people in the list were involved in the cryptocurrencies industry. Some of them were the founders of Bitmain, Binance, and OkCoin.
The ETH/USD pair declined to a low of 109.5. This was the lowest level since September 20. It was also a major drope because the pair declined below the important level of 200. As shown on the four-hour chart below, the pair is trading within a narrow range. Therefore, if the new downward momentum continues, the pair will likely test the previous low of 156.