Bitcoin on Tuesday gave another white-knuckle ride with a 10% drop before paring much of the loss later as speculators were struggling to price the crypto with an impending prospect of a further interest rate hike in an attempt to quell inflation.
More on the Bitcoin slump
The largest cryptocurrency in the world had recovered from half of the intraday loss of $2,386 in Tokyo to $22,690. Other digital coins like Avalanche and ether also trimmed their losses. In contrast, Polka dot was among the few that flirted with gains.
As monetary policies around the world are tightened to fight inflation, draining out the liquidity from the market, cryptocurrencies have become a symbol of speculative assets. Each swoon raises the question of whether it is the right time to buy at the dip, considering the nadir may be close by.
According to Sathvik Vishwanath, Unocoin crypto exchange Chief Executive Office said in Bangalore said, buyers were waiting for opportunities to buy on dips, which is why Bitcoin rebounded from the lows. However, the reprieve can still be temporary as retail investors are still jittery about liquidity.
Crypto lender Celsius network froze withdrawals on Monday, worsening the concerns about the stress in the crypto sector-leading new crisis just after a month when the collapse in Terra Stablecoin disturbed the market.
Traders also look closely at MicroStrategy Inc., whose big bets on Bitcoin have backfired. The company had loaded up on Bitcoins and may now need additional collaterals for loans as Bitcoin tests an essential price range flagged off last month.
According to data from Coinglass, more than $1 .1. A billion positions got liquidated in the Crypto market on Monday, including about $468 million in the short position and $685 million on the long side. The data revealed the highest in both long and short positions in the past three months.
In Asia, SBI Holdings Inc. and Monnex Group, which are Crypto linked shares, retreated on Tuesday.
Many strategists are looking for signs of crypto bottom levels. FundStrat Global advisors Mark Newton said that Bitcoin is close to an intermediate level of support, indicating that buying on dips by the end of the second quarter would be correct.
