Crypto market sells off, is a deeper correction in the cards for Bitcoin and Ethereum
New York (Nov 16) The crypto space saw a significant selloff in the last 24 hours, with Bitcoin dropping nearly 9% and Ethereum, at one point, down 10%.
Bitcoin recovered slightly after dropping below $59,000 and was last trading at $60,880.45, down 5.84% on the day.
Ethereum dropped below $4,300, finding support around that level and last trading at $4,303.3, down 7.6% on the day.
The correction was all across the board as cryptocurrencies like Solana, Binance Coin, and Cardano all suffered losses. Crypto's combined market cap dropped below $3 trillion, last standing at $2.8 trillion.
One of the reasons for the pullback was China's state planner, the National Development and Reform Commission (NDRC), stating on Tuesday that it will continue to crack down on cryptocurrency mining.
Virtual mining "causes large energy consumption and carbon emission. It has no active impact to lead industry development or scientific progress," CNBBC translated the NDRC spokesperson Meng Wei as saying. "Regulating cryptocurrency mining activities has significant meaning in optimizing our industrial structure, saving energy and cutting emission, achieving carbon emission and neutrality goals."
China's crackdown on crypto mining and trading has sent the market crashing earlier this year.
However, this week's pullback doesn't seem to be causing much panic in the space, with Bitcoin and Ethereum both finding a bottom.
"In a sign of how different asset classes can be, while I've just referred to a 5% gain in gold over a couple of weeks as being very strong, today's 5% decline in bitcoin is anything but extraordinary. No panic is setting in when bitcoin slips 5% in the way it would for the yellow metal," said OANDA senior market analyst Craig Erlam.
The $60,000 level is acting as a solid support level right now, just $9,000 from bitcoin's recent new all-time highs. "The cryptocurrency has quickly seen support around $58,500 after breaking below $60,000, where it also rebounded off just a few weeks ago," Erlam said.
But if bitcoin drops further below that $60,000 level, the analyst warned it would be in danger of a more significant selloff.
"A break of this level may point to a deeper downturn, with attention perhaps shifting back towards the $50,000 region, but as ever with bitcoin, that is never clear. There is incredible support in the space, and a big rally towards the highs never feels that far away," he said.
Renowned economist Mohamed El-Erian revealed this week that he bought bitcoin a few years ago when it dropped towards $3,000 but then sold it at $19,000, a few months before it hit $60,000.
"I felt compelled to buy it — I really did," El-Erian told CNBC. "I felt like I had framed it. I had this level. I had an entry point."
El-Erian noted that he would buy again once some of the speculation was shaken out of the market.
"You really don't want to ask me about valuations because I don't quite understand why $60,000, as opposed to $68,000, is the right level," El-Erian added.
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