Market Wrap: Bitcoin retires from $ 13K as Ether falls on DeFi Cooling

Bitcoin retreated from its 2020 highs as the ether slips as DeFi cools.

Bitcoin’s price took a slight dip on Friday after hitting new 2020 highs that took it above $ 13,000 in the past week. However, analysts and traders said they were hardly surprised by the recent moves.

Read more: Active Bitcoin addresses at the highest from 2017’s $ 20K price record

An immediate sell-off from longtime bitcoin holders when prices hovered around $ 13,000 could be the reason bitcoin struggled to maintain its rally, according to on-chain data site Santiment.

Bitcoin’s dormant circulation, which tracks bitcoin activity that had previously stood still for at least a year, has recorded its largest spike since February 7, 2020, data from Santiment shows.

“Renewed long-term BTC investor activity often means greater price volatility in the future,” Santiment’s market analyst Dino Ibisbegovic told CoinDesk. “Similar spikes, particularly during price hikes, have typically predicted periods of price consolidation or short-term corrections in the past.”

Darius Sit, founder of Singapore-based QCP Capital, told CoinDesk that the market could expect a further pullback over the weekend, noting that the TD Sequential indicator was able to signal a reversal in bitcoin prices.

On the other hand, the growing interest in open options could support a minimum price per bitcoin in excess of $ 12,500, said Guy Hirsch, US CEO for eToro, in an email to CoinDesk.

“That price has long been seen as the glass ceiling that had to break for BTC to make any significant moves upward,” Hirsch said. “Given the positive sentiment behind yesterday’s PayPal news, I wouldn’t be surprised to see bitcoin being challenged and back over $ 13,000 in the near future.”

Additionally, significant institutional interest in cryptocurrency continued to grow. This is evidenced by the fact that this week the tCME, an exchange driven primarily by institutional participation, overtook Binance and BitMEX to be the second largest bitcoin futures platform by number of open contracts.

Read more: The rise in CME in Bitcoin futures rankings signals growing institutional interest

“The news from PayPal is this week’s bright and shiny item, but it’s just the tip of the iceberg,” Matt Hougan, global research manager at Bitwise Asset Management, told CoinDesk. “Behind the scenes there has been a sea change in the attitudes of institutional investors, broker-dealers and financial advisors towards cryptocurrencies in recent months.”

“We are in a legitimate bull market right now,” he added.

The second largest cryptocurrency by market capitalization, ether (ETH), fell on Friday to around $ 409.05 and slid 1.78% in 24 hours at 20:00 UTC (16:00 ET).

With a bitcoin price, the token began reversing some of the gains it made mid-Thursday when ETH / BTC rose 4% in two hours, down 2% from the daily high and traded at 0.0317 BTC for ether and continuing the downtrend from the week. open for bitcoin based trading pairs.

The decline of Ether versus bitcoin could signal a continued cooling of alternative cryptocurrencies (altcoins). Taking Twitter, leading market data provider, Skew, noted Ether’s downtrend, rhetorically asking, “Altseason on hiatus?”

Decentralized finance (DeFi) drove the summer surge in altcoin yields, and the collapse in decentralized trading volumes (DEX) corroborates a potentially significant drop in speculative interest in altcoins, especially DeFi-focused assets. The final 30-day volume for major DEXs decreased by 41%, according to data from Dune Analytics.

The digital assets on CoinDesk 20 are all Red Friday. Biggest Losers at 20:00 UTC (16:00 ET):

Read more: Five on-chain indicators that investors should follow: Chainalysis