Bitcoin recovers, climbs 7.6% to pass $20,400

June 20, 2022

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June 19 (Reuters) – Bitcoin on Sunday rose around 7.6% to $20,404 from its previous close, signaling a recovery from a sharp drop on Saturday.

Bitcoin, the world’s biggest and best-known cryptocurrency, is now up 16.7% from this year’s low of $17,592.78 on June 18, when it tumbled on investor worries about growing troubles in the crypto industry and amid a general pull-back from riskier assets. read more https://rulmovie.tumblr.com

Andrew Brenner, head of international fixed income at National Alliance Securities, on Sunday said the rise in Bitcoin was likely the result of retail investors buying up the digital currency over the weekend, when few professional traders are working.

“Some buyers think now is a good time to get in because Bitcoin got down to a level which shows some near-term attractiveness,” Brenner said. He added that Bitcoin and other digital currencies remained extremely volatile.

Ether , the coin linked to the ethereum blockchain network, on Sunday rose more than 13% to $1,131 from its previous close on Saturday, which at $993 marked Ether’s lowest price since the beginning of this year.

The sell-off in the crypto market has coincided with an equities slide, as U.S. stocks suffered their biggest weekly percentage decline in two years on fears of rising interest rates and the growing likelihood of a recession.

Brenner said digital currencies were not a good investment at a time when the U.S. Federal Reserve tightens the supply of dollars by ending expansive monetary policy.

“As long as the dollar continues to show strength, digital currencies is not where you want to be,” Brenner said.

Bitcoin’s Price Climbs Above $20,000 After Sharp Crypto Selloff

The cryptocurrency has lost 70% of its value from its record high in November

The price of bitcoin fell below $18,000 Saturday before rebounding Sunday evening above $20,000, a level widely monitored by cryptocurrency enthusiasts.

Bitcoin rose 10% to $20,571.29 Sunday evening after falling to as low as $17,601.58 Saturday afternoon, according to CoinDesk. The digital currency lurched below $20,000 Saturday, sparking fears it could plunge further. It has lost 70% of its value from its high in November.

Concerns about the Federal Reserve’s actions to tame higher-than-expected inflation have pushed stocks and cryptocurrencies into a bear market. Big names in the industry, including Coinbase Global Inc., COIN 0.33% the biggest cryptocurrency exchange in the U.S., have recently announced job cuts.

“Bitcoin breaking the $20,000 price level was long coming, given the pessimism that we have in the market,” said AvaTrade market analyst Naeem Aslam. The fallout from the collapse of the stablecoin Terra USD in May will continue to ripple out, he said, and that is depressing sentiment.

There is no specific significance to the $20,000 level, but the price slid below $19,783, a previous high water mark hit in 2017, according to Coinbase. Bitcoin bulls have long held that the cryptocurrency had in recent years entered a new stage of development and acceptance, and that it wouldn’t fall below that 2017 level.

“It will be a lot of pain for a lot of investors,” said Yuya Hasegawa, a market analyst at Japanese crypto exchange Bitbank Inc. People will lose confidence in the crypto market as a whole, but seasoned crypto investors and those who believe in its long-term prospects will see an opportunity to buy at discounted prices, he said.

To Wayne Sharp, a retired investment adviser in Columbus, Ohio, the cratering crypto market came as no surprise. She bought about $10,000 worth of bitcoin in 2020 and has been sitting on it since then, with no plans to sell or buy more. “I’ve seen a lot of cycles. I’ve been watching this for 45 years,” she said. “Humans just make the same mistakes over and over again.”

Ether, another major cryptocurrency, surged 19% to $1,141.52 after falling below $1,000 Saturday. It traded as low as $880.93, according to CoinDesk, its lowest level since January 2021.

Bitcoin’s slide from its record high of $67,802 in November has contributed to a roughly $2 trillion wipeout in the broader market. Crypto’s total market capitalization, which peaked in November at nearly $3 trillion, stood at roughly $834 billion Saturday—its lowest since January 2021, according to data provider CoinMarketCap.

Bitcoin traded around the $30,000 mark for most of May before dropping sharply again in June after a fresh inflation shock and worries about rising U.S. interest rates. Investors have been unloading assets seen as risky, such as cryptocurrencies and technology stocks.

Individual investors have received margin calls, with about $349.25 million of collateral pledged by about 88,415 retail traders liquidated over the past 24 hours, according to data provider CoinGlass. That compares with $1 billion earlier this week.

More previously highflying crypto firms have been feeling the pain in what has been dubbed a “crypto winter.” Cryptocurrency lender Babel Finance told customers Friday that it was suspending redemptions and withdrawals from all products, citing “unusual liquidity pressures.” One of the largest crypto lenders, Celsius Network LLC, hasn’t let users withdraw funds for roughly a week, citing extreme market conditions.

Cryptocurrency-focused hedge fund Three Arrows Capital Ltd. has hired legal and financial advisers to help work out a solution for its investors and lenders after suffering heavy losses from a broad market selloff in digital assets, the firm’s founders told The Wall Street Journal.

The sudden squeeze in available, spendable capital, often called liquidity, is exacerbating the selloff, and it isn’t something that can easily be fixed, said Ryan Shea, an economist at crypto investment firm Trakx. Unlike in the traditional markets, “there is no central bank to step in and intervene, the process just has to play out,” he said.

The surge in cryptocurrency valuations over the past two years was aided by big-name investments from companies such as Tesla Inc. TSLA 1.72% and a period of lower interest rates during the pandemic that encouraged individuals stuck at home to buy riskier assets in the hopes of greater returns.

Interest-rate increases now being enacted by the Fed come as blowups in some crypto projects have rippled across the ecosystem. So-called stablecoin TerraUSD broke from its $1 peg last month after intense selling pressure, leaving it and its original sister cryptocurrency, Luna, now nearly worthless. As its developers sought to defend TerraUSD’s peg, they sold bitcoin reserves, weighing on the price of it and other assets.

Crypto investors more recently have become concerned about a derivative of the cryptocurrency ether that is locked up until the Ethereum network transitions to a less energy-intensive model. So-called Lido-staked ether has been trading at a discount to ether itself recently.

“Crypto has enough problems. It doesn’t need the macro,” said Noelle Acheson, head of market insights at crypto lender Genesis Global Trading, in reference to rising interest rates and inflation concerns.

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