The big crypto sell-off continues. Earlier in the morning, bitcoin, the world’s largest cryptocurrency, briefly fell below $30,000 and had continued to trade south of $40,000 – the first time since early February – for a few hours before making a comeback above the key level. Other major cryptocurrencies followed suit, with ether (ETH) falling by 22% in the past 24 hours, Binance coin (BNB) by 23% and Cardano (ADA) by 18% as of May 19, 16:09 p.m. ET.
More than 700,000 futures traders liquidated their positions, amounting to $8.48 billion, over the 24 hours preceding late Wednesday morning, according to Bybt, a cryptocurrency futures trading and information platform. More than 50% of traders were short on cryptocurrency exchanges Binance, Bybit and Huobi, though long positions prevailed at other major marketplaces, including FTX and Deribit.
Despite this volatility, long-term bulls remain defiant and believe that the downturn is not indicative of any fundamental shift in bitcoin and crypto’s long-term trajectory.
“The pullback we’re seeing today is driven by panicked selling and forced deleveraging, primarily from retail investors in overseas markets,” says Matt Hougan, chief investment officer at Bitwise Asset Management, issuer of the world’s largest cryptocurrency index fund. The news of Tesla backtracking on accepting bitcoin for its electric cars, China reiterating its anti-crypto stance, the Office of the Comptroller of the Currency (OCC) deciding to review the regulatory guidance on digital assets fueled the panic but did not “fundamentally change the long-term trajectory of bitcoin, ethereum or other crypto assets,” writes Hougan in an email to Forbes. “I suspect after the deleveraging exhausts itself we will settle into a stronger base. It’s the flipside of a market that is (even after today’s pullback) still up 300%+ over the past year.”
Cathie Wood, founder, CEO and chief investment officer of Ark Invest, reiterated her view bitcoin will rise to $500,000 on Bloomberg TV. “We go through soul-searching times like this and scrape the models, and yes, our conviction is as high,” says Wood. “I think we are in the capitulation phase, which is a really great time to buy, no matter what the asset is.” During the interview, Wood also addressed Elon Musk’s environmental concerns, hinting at the speedy adoption of renewable energy sources by bitcoin miners.
“This bitcoin correction, while extreme if it happened to the equity market in such a short period, is right in line with moves we have seen many times in bitcoin,” says famed value investor Bill Miller in a written comment. The current volatility is “pretty routine”, writes Miller, comparing bitcoin’s price swing to “Black Thursday” of March 2020, when the cryptocurrency lost almost half of its value, crashing from nearly $8,000 to around $4,700 in a matter of hours.
Additionally, two public companies that have put billions of dollars in bitcoin on their balance sheets, Tesla and MicroStrategy, both continue to hodl the cryptocurrency.
Tesla’s chief Elon Musk tweeted “Tesla has diamond hands” through a combination of text and emojis, implying that the company would not be selling its $1.7 billion bitcoin stake.
Also in a tweet, Michael Saylor, founder and CEO of MicroStrategy, announced the company has “not sold a single satoshi”. MicroStrategy is the largest publicly traded hodler of bitcoin, with more than $3.2 billion worth of cryptocurrency in its treasury. A day earlier, the company purchased an additional 229 bitcoins for $10 million in cash at an average price of $43,663 per bitcoin. Saylor has not been immediately available for comment.