Friday frenzy roils altcoin prices

Friday frenzy roils altcoin prices

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A Friday frenzy of sell-offs, led by Cardano’s plunge, roiled altcoin prices. – Photo: Shutterstock

A Friday frenzy of sell-offs roiled altcoin prices, ending two weeks of relative cryptocurrency market calm.

Prices declined across the board as analysts struggled to determine the cause of the downturn. STEPN (GMT) and filecoin (FIL) were the biggest losers as they both were down about 17% around the time that conventional markets closed in North America. (All figures based on CoinMarketCap data.)

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Not a flash crash

Numerous coins – including FLOW, NEAR, QTUM and apecoin (APE) – suffered double-digit percentage declines. But this market-wide drop differed from others earlier this year in that it was not tied to a major crypto’s financial collapse or another major incident.

“It’s not showing the pattern of a flash crash, as the assets didn’t immediately rebound sharply but sank even lower in the hours that followed,” Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown, told CNBC. “It seems likely that is was as a result of a large sale transaction, in the absence of other more external factors.”


Cardano plunges first

According to Streeter, the Cardano blockchain’s  coin ADA plunged first. The drop occurred after prominent tech developer Adam Dean said Thursday in a tweet that Cardano’s Vasil hard fork testnet, or test network, is “catastrophically flawed” due to a bug in a node.

Dean is a former Cardano stake pool developer.

As recently explained, Vasil is one of two major hard forks under development, along with Ethereum’s Merge. Decred completed a hard fork recently.

After ADA plunged, bitcoin (BTC), ether (ETH), which is the main coin of the Ethereum blockchain, and then smaller coins like dogecoin (DOGE), also descended.


Sector withstood troubles

The crypto sector had easily withstood such recent troubles as the Nomad Bridge hack, US government sanctions against crypto mixer Tornado Cash, and Singapore-based lender Hodlnaut’s decision to freeze withdrawals, swaps and deposits.

That calm response contrasted with price implosions that resulted from the Celsius Network collapse, and similar financial strife experienced by fellow crypto lender Voyager Digital and hedge fund operator Three Arrows Capital.

‘Fresh chill’ descends

Streeter told CNBC that Friday’s “fresh chill” has descended amid fears that the market is heading for a crypto winter. Many other observers have suggested that the crypto winter is already here.

Another analyst suggested that macroeconomic factors and concerns about more US Federal Reserve (Fed) interest-rate hikes also could also have affected crypto prices.

“US equity markets have pulled back since Wednesday’s release of the July Fed meeting minutes, the key takeaway being that the Fed likely won’t be finished with rate hikes until inflation is tamed across the board, with no guidance offered on future rate increases either,” Simon Peters, a crypto market analyst at eToro, told CNBC.

“With the tight correlation between US equities and crypto in recent months, I suspect this has filtered through to crypto markets and it’s why we are seeing the sell-off. The trend has also perhaps been exacerbated by liquidation of long positions on bitcoin perpetual futures markets.”

Citing Coinglass data, Peters told CNBC that Friday marked the biggest liquidation of long positions on futures since June 18.

Volatility again wracking market

Market leaders bitcoin and ether sank below $22,000 and $1,800, respectively – after easily holding well above those levels in recent days. Bitcoin had briefly surpassed $25,000 and ether had exceeded $2,000 temporarily.

“Although at $21,800 bitcoin is still some way off its June lows of under $19,000, volatility is once again wracking the market,” Streeter told CNBC.


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