February 4, 2023

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Black Sunday for crypto as bitcoin and others plunge

2 min read


Various cryptocurrencies fall 20%. A look at insider selling at Coinbase

Dogecoin chart

Just days after hitting a record high of $64,899, bitcoin had its worst day in seven weeks, falling as much as 15% before trimming the decline to 9% and trading at $55,260.

The drop came in an across-the-board selloff in crypto. Ether fell as much as 18%, ripple is down 19% and litecoin down 18%.

Somehow dogecoin has held onto most of last week’s gains, and is up 30% in the past 24 hours (it’s truly the t-bill of the crypto market).

Bitcoin chart

Why are cryptocurrencies selling off?

There’s no clear reason for the dump. The usual talk about regulation is doing the rounds. Rehash stories about India crackdowns are circulating but that’s old news. There’s also talk about the US increasing regulatory scrutiny. I expect that’s coming but there’s nothing new on that front in the past day.

For me, the Coinbase direct listing is a factor. The 2017 peak in bitcoin came right after bitcoin futures began trading and people could be seeing the start of trading for theĀ  large crypto exchange as a similar catalyst. Having a centralized exchange worth as much as $100B (put another way: extracting $100 billion from an inefficient market) is ironic in many ways.

What’s worse is the level of insider selling at Coinbase. The numbers are utterly shocking with insiders dumping nearly $5 billion in shares in just two days. The CEO of the company sold $291.8m in shares. Worse is CFO Alesia Hass who sold all of her 255,500 shares for nearly $100m. She retains unvested options but it’s not a great sign.

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