HONG KONG/LONDON/NEW YORK, May 13 (Reuters) - Cryptocurrencies steadied on Friday, with bitcoin recovering from a 16-month low after a volatile week dominated by the collapse in value of TerraUSD, a so-called stablecoin.
Crypto assets have been swept up in broad selling of risky investments on worries about high inflation and rising interest rates, but have started showing signs of settling.
Although the near-term trajectory of the crypto market is challenging to predict, the worst may be over, said Juan Perez, director of trading at Monex USA in Washington.
"Perhaps now that all the obstacles to global growth along with monetary tightening are clear, perhaps we will start seeing swings upwards," he said.
Bitcoin , the largest cryptocurrency by market value, last rose 4.85% to $29,925, rebounding from a December 2020-low of $25,400 which it hit on Thursday.
Although it hit a high of just under $31,000 on Friday, bitcoin remains far below week-earlier levels of around $40,000 and unless there is a huge weekend rally it is on track for a record seventh consecutive weekly loss.
Major Crypto Crack Under Pressure
BTC dropped a third of its value, or $13,000, in more more than eight sessions and is down more than 45 percent so far this year. It has lost nearly two-thirds of its value since reaching a high of $69,000 in November 2021.
The price of Ether, the second-largest digital currency, plummeted to $1,704.05 per token. It is the first time since June 2021 that the token has dipped below $2,000. Ether was recently priced at $1,937.88, a decrease of 8.8 percent.
Scottie Siu, investment director of Axion Global Asset Management, a Hong Kong-based firm that operates a crypto index fund, stated, “I do not believe the worst is gone.”
“I believe there will be more negative outcomes in the following days. I believe the market will stabilize if open interest plummets significantly, removing speculators from the equation,” Siu said.
In a Reuters report, citing statistics from CoinMarketCap, the market value of all cryptocurrencies has fallen to $1.12 trillion, nearly a third of where it was in November, with more than 35 percent of the drop occurring this week.
Crypto total market cap at $1.28 trillion on the daily chart | Source: TradingView.com
Investors Ditching Crypto?
The rout showed signs of spreading further Thursday as crypto-related stocks in Asia also nosedived.
The stock price of the Hong Kong-listed fintech company BC Technology Group fell by 6.6%. The Japan-based Monex Group, which operates the TradeStation and Coincheck platforms, finished the trading day 10 percent lower.
In the meantime, investors are abandoning cryptocurrencies at a time when stock markets have plummeted since the peak of the coronavirus pandemic in the face of paranoia of rising prices and a worsening economic outlook.
Wednesday’s release of U.S. inflation data revealed that prices for goods and services increased by 8.3 percent in April, above analysts’ expectations and approaching the highest level in nearly four decades.
Sources: Bitcoinist.net, https://bit.ly/3PgDxMW