Bitcoin has fallen below $40,000 for the first time since July with the currency continuing to pile on losses as its market cap nearly halves since November to now $760 billion.
Bitcoin has been in a bear market of sorts for the past three months since the November high of $70,000 with it now close to 50% down.
That’s after another red in stocks with Nasdaq down 1.6%, S&P500 down 0.9% while Dow is down 0.44% as of opening.
Ethereum has fallen below $3,000 with its ratio down by about 10% as well to below 0.074 BTC per eth.
Some attribute this action to Fed seemingly being more hawkish than thought on rising interest rates, but Jerome Powell has not said anything yet with him expected to appear at a Senate hearing on Tuesday.
The December job report was worse than expected with the effects of the lockdown in some of Europe and Canada still to be seen.
In China, Shimao Group Holdings which has some $5.72 billion in dollar bonds, has put all its properties on sale as a real estate collapse keeps rolling on there.
The Shanghai Composite Index (SHCOMP) is up however by 0.39% even as data coming out from China suggests a slowdown.
The big question is of course where all the money coming off the real estate market will go? China has strict capital controls with its central bank trying to close any loopholes for years, but the size of dollar bonds indicates there’s also plenty of foreign investors.
Gas prices are up by nearly 5% today to $4.1, but still far below the $6.2 in November. While oil is down some 0.28% to $78.65.
All suggesting investors are maybe just sitting on cash and not really going anywhere as not much is rising, so maybe they’re just waiting to buy in again.
In bitcoin most probably have cash on the sideline waiting to see what it does, making it very much a question currently whether we’re due for a reversal.
You’d think at some point all this down down is going to get a bit boring with all this interest rates stuff, inflation and so on, including China’s property collapse, a bit of old news now.
So it’s obviously fair to ask has it all been priced in yet? That’s for the market to say but where bitcoin is concerned Bitfarms has hinted current price is now below mining costs.
“With the dip in BTC while mining hardware prices remain high, we seized the opportunity to move cash into BTC,” said Emiliano Grodzki, Bitfarms Founder and Chief Executive Officer.
The cost to mine a bitcoin is generally seen as the floor to price because once price falls below cost, certain dynamics kick in which includes investment going towards buying bitcoin directly rather than into mining gear.
There are of course balancing mechanisms so cost to mine is not some hard rule, but once price falls below cost you’d expect miners to stop selling.
Again no one quite stops miners from still selling, but if they’re not smart enough then eventually they will be bankrupt at which point they will definitely stop selling.
Therefore if price has fallen below cost then the downside might be less than the upside because new dynamics kick in.
As it happens bitcoin has now risen above $40,000 and eth above $3,000, but just what actual direction it will take, remains to be seen.