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Bitcoin rebounds to US$30,000 after prices tanked on Thursday

by NURUL SUHAIDI / pic by BLOOMBERG

THE world’s most popular cryptocurrency bitcoin recovered to US$30,404.54 (RM133,780) today after hitting a 16-month low on Thursday falling below US$29,000 for the first time since December 2020.

The digital coin lost almost 60% in value after hitting a record high in November last year. 

Investors have turned negative over their cryptocurrency investments. 

According to FxPro senior market analyst Alex Kuptsikevich, Ethereum, meanwhile, has lost 24 % of its value in the previous 24 hours, dumping to US$1,815, while other leading altcoins in the top 10 have lost value from 6% (Tron) to 37% (Solana).

Based on CoinMarketCap, the total crypto market capitalisation fell 19.4% overnight to US$1.14 trillion. 

Bitcoin’s dominance index jumped 2.5 percentage points to 44.7% due to the altcoin sell-off.

“Although bitcoin fell resumed on Wednesday, however, this time it outpaced the stock market by a significant margin and potentially even pulling it down,” Kuptsikevich said in a research note.

Bitcoin broke through July’s lows and tested late-December 2020 lows, just around US$26,500.

In addition, the situation became worse for altcoins as it fell sharply on the back of terra (Luna), losing 96% in just one day on UST’s (project’s stable coin) drawdown.

Another asset that continued losing value is the terra ecosystem’s algorithmic stablecoin, UST itself despite its declared peg to the US dollar.

“UST has fallen 30 cents from US$1 earlier this week, and according to The Block, Luna Foundation Guard’s (LFG) attempts to stabilise the UST stablecoin have failed.

“Given that, the focus of crypto market participants is now on trust in stable coins.

According to him, tether is the most traded stablecoin, with a daily turnover quadruple that of bitcoin and a price that is -2% below the dollar due to capital outflows,” Kuptsikevich said.

He also noted that stablecoin’s volatility is a new reality for the crypto market.

“Previously, investors preferred to park capital in stable currencies, exiting altcoins and withdrawing it from cryptocurrencies. Now we see a full-fledged exodus from the sector, and the entire crypto market is crumbling like a house of cards,” he said.

Aggravating the situation, the US Federal Reserve also recently published its semi-annual Financial Stability Report, highlighting the risks of using stable coins.

The report mentioned that the Democrats on the US Senate Banking Committee have proposed increased oversight of cryptocurrencies, including stable coins.

Not only that, according to CryptoQuant, holders have sold some of their bitcoins and investors that have been holding bitcoin for more than a year have been taking it to exchanges to sell over the past month.

Supporting the trend, the CEO of cryptocurrency exchange Kraken, Jesse Powell also said he would like to see bitcoin fall to US$20,000.

“Looking at the case, the CEO said he would allocate the lion’s share of his capital to buying bitcoin,” Kuptsikevich said.

Zukri

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