Market Wrap: Bitcoin Pulls Back From $13K While Ether Falls on DeFi Cooling

Oct 23, 2020 at 20:44 UTC.Bitcoin has pulled back from 2020's highs while ether slips as DeFi cools off.

An immediate sell-off by long-time bitcoin holders when prices hovered around $13,000 could be why bitcoin struggled to maintain its rally, according to on-chain data site Santiment.

Bitcoin's dormant circulation, which tracks the activity of bitcoin that were previously unmoved for at least one year, has recorded the biggest spike since Feb. 7, 2020, Santiment's data shows.

"A renewed activity of long-term BTC investors often means increased price volatility up ahead," Dino Ibisbegovic, market analyst at Santiment, told CoinDesk.

"Similar spikes - particularly during price rallies - have typically earmarked periods of price consolidation or short-term corrections in the past."

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

On the other hand, growing open options interest may support a pricing floor for bitcoin above $12,500, said Guy Hirsch, managing director of U.S. for eToro, in an email to CoinDesk.

"Given the positive sentiment off the back of yesterday's PayPal news, I would not be surprised to see bitcoin challenged and move back past $13,000 in the near future."

The second-largest cryptocurrency by market capitalization, ether, was down Friday trading around $409.05 and slipping 1.78% in 24 hours as of 20:00 UTC.Priced in bitcoin, the token started to reverse some of the gains made mid-Thursday when ETH/BTC spiked 4% in two hours, down 2% from the daily high and trading at 0.0317 BTC per ether and continuing the downward trend since the week's open for bitcoin-based trading pair.

Ether's decline against bitcoin may signal a continued cooling of alternate cryptocurrencies.