According to Bloomberg News, the largest digital token falls back to nearly the $30,000 limit. However, crypto is way more stable than what was worst during the TerraUSD turbulence. Bitcoin fell alongside the US equity futures on Monday following poor Chinese economic activity data taking a part of the risk sentiment.
The biggest cryptocurrency dropped by 2.2% and was found trading at $30,360 in Tokyo at 11:50 am. Other tokens that include Ether and Avalanche were found to be on the back foot as well. The S&P 500 futures were found in the red following Chinese figures pointing to economic contraction.
Overall, however, the digital assets markets were calmer than last week’s turmoil over the collapsed stable coin. Bitcoin fell to a low $25,425 on Thursday following the unraveling of TerraUSD algorithmic stablecoin, upsetting the entire ecosystem that offers support to it in disarray. At its peak, the panic prevailing in the market engulfed the $76 billion worth of stable coin Tether, a key cog in the crypto assets that dropped briefly from the dollar peg.
Double trouble
Changpeng Zhao, who is crypto exchange Binance Holdings Ltd’s chief executive officer, tweeted on Sunday and revealed that the market had witnessed a major decline which has caused ripple effects in the industry. Still, the condition has also found a new resiliency in the market that was not prevalent earlier.
An essential difference between the present environment and other prolonged downturns like “crypto winter” in 2018 is the number of institutions engaged in the market, which may be a source of offering support, stated Paul Veradittakit. He is a partner asset manager at Pantera Capital. Verradittakit also said that compared to 2018, the number of institutional investors has more crypto exposure, and most of them see this as a buying opportunity.
Ebbing rally
The price action of Monday witnessed Bitcoin giving back some of the rallies of Sunday. The total market value of the digital currencies declined by approximately $250 billion in the last seven days to about $1.37 trillion, as per data obtained from CoinGecko. Bitcoin is about 56% off its all-time high recorded in November.
Bloomberg News reports that while the crypto markets might have gulped down the worst of the fallout of TerraUSD, the asset class has other challenges to face, most remarkably, surging interest rates and stringent liquidity conditions.
According to the President of cryptocurrency exchange Matrix, Vasja Zupan, he remains bullish, especially on the largest cryptocurrency, Bitcoin. However, he does see high volatility briefly, which might be followed by a period that will have much lower volumes and at prices that are lower before it can be expected to trend to new all-time highs.
