Bitcoin Crash Shows Uncorrelated Asset Idea Is a ‘Big Lie’

Bitcoin Crash Shows Uncorrelated Asset Idea Is a 'Big Lie'

Bloomberg— The sale of cryptocurrencies resumed on Monday, and bitcoin (XBT) fell back below $30,000 as global stock markets remained under pressure.

The largest cryptocurrency fell as much as 5.6% and was trading at $29,653 as of 10:12 a.m. in New York. Other tokens, such as ether (XET) and avalanche, also fell. US equities traded near recent lows as investors weighed the latest signs of economic malaise from the US and China.

Overall, however, digital asset markets remained calmer compared to the worst of last week’s turmoil over a collapsing stablecoin.. The cryptocurrency market in general has again followed other risky assets, such as technology stocks.

“I think it will continue to trade alongside the equity market and risk assets,” said David Donabedian, chief investment officer at CIBC Private Wealth Management. “That is the big lie that has been exposed, the idea that it is a new asset class that is going to help diversify your portfolio has been blown up.”

On Thursday, bitcoin fell to a low of $25,425 after the TerraUSD algorithmic stablecoin fell apart, jeopardizing the entire ecosystem that supports it. At its height, market panic engulfed the $76 billion stablecoin Tether, a key crypto asset cog that briefly shed its 1-1 peg to the dollar..

Double trouble Bitcoin and ether are the emblem of a difficult year for cryptocurrenciesdfd

“We have witnessed the rapid decline of a big project, which has shaken the entire industry, but also a new resistance in the market that did not exist during the last market downturn,” Changpeng Zhao, CEO of the company, tweeted on Sunday. cryptocurrency exchange Binance Holdings Ltd.

One difference between the current environment and other protracted downturns like the “crypto winter” of 2018 is the number of institutions now participating in the market, which may be a source of support.said Paul Veradittakit, a partner at digital asset manager Pantera Capital.

“Compared to 2018, there are more institutional investors with exposure to crypto and most see this as a buying opportunity,” Veradittakit said.

decadent rebound

On Monday, bitcoin recaptured some of the rally from Sunday. The total value of the cryptocurrency market has fallen by about $326 billion in the last seven days, reaching roughly $1.33 trillion.according to data from CoinGecko. Bitcoin is 57% off its November all-time high.

While crypto markets may have digested the worst of the TerraUSD crash, these assets face other challenges, most notably rising global interest rates and tightening liquidity conditions..

Bitcoin’s lowest support is currently at $27,000, “which can probably stabilize price action in the coming days”said Edul Patel, CEO of Mudrex, an algorithm-based crypto investment platform.

With the assistance of Philip Lagerkranser and Beth Williams.

This article was translated by Andrea González


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