Bitcoin bounces back but the crypto turmoil isn’t over
New York (CNN Business) The cryptocurrency market stabilized Thursday, with bitcoin ( ARSC ) climbing back above $40,000. Even so, the world’s largest digital currency has lost more than 30% in market capitalization since its peak in mid-April.
The wider crypto market looks similarly bruised.
Several digital currencies are still showing double-digit percentage losses from where they were before the latest turmoil. And all the crypto bloodletting points to a big warning: invest at your own risk.
Since May 12, the global cryptocurrency sector has lost more than 30% of its total market value, according to data from CoinMarketCap . By Thursday morning, the world crypto market value had fallen to nearly $1.8 trillion, down from more than $2.5 trillion just last week.
This week’s steep selloff came on the heels of China cracking down on cryptos . In response, bitcoin tumbled to just above $30,000 as digital currencies across the board sold off.
But investors shouldn’t be surprised about the volatility, William Quigley, managing director at crypto-focused investment fund Magnetic said on the CNN Business digital live show Markets Now Wednesday. Cryptos are still a relatively new asset, Quigley noted, and are therefore far less predictable than more traditional investments.
“Keep in mind as well, we all tend to focus on day-by-day, week-by-week. But that’s not how most people buy cryptocurrencies, or even stocks,” Quigley said.
Meanwhile, ethereum co-creator Vitalik Buterin told CNN Business that he believes cryptos are in a bubble. And it’s hard to tell when bubbles will burst.
ethereum ELX Then again, the momentum could keep building: Since the start of the year,and joke-turned-crypto dogecoin have increased in value nearly 290% and more than 8,000% respectively — even after accounting for the recent rout. Bitcoin is up more than 40% in that time frame, according to Coindesk data.
Ups and downs
Bubble or not, the crypto landscape looked to be on the road to recovery Thursday.
“The bigger the drop, the higher the bounce,” Fawad Razaqzada, market analyst at ThinkMarkets, said in a note.
Bitcoin is up some 18% and was at more than $41,900 early Thursday. Ethereum rose 22% to around $2,900.
“But it remains to be seen whether the recovery will hold,” Razaqzada added. “Cryptos will likely stay volatile for a while as speculators weigh the impact of China’s ban and Tesla’s U-turn against the recent growth in institutional interest.”
Bitcoin falls further as China cracks down on crypto-currencies
I ended a piece in which I compared the cryptocurrency with 17th-Century Dutch tulips or London houses in the 1980s with this thought: “Unless and until Bitcoin can be used to buy a sandwich, or be accepted by your friends when you pay them back for a restaurant meal, then it is likely to remain just a playground for geeks and gamblers.”
Crypto carnage abates as Bitcoin bounces back to $42,000
After a brutal selloff, crypto markets were showing signs of recovery on Thursday with Bitcoin and Ether clawing back some losses.
Crypto markets are showing signs of recovery after Wednesday’s dramatic selloff.
Bitcoin hovered near the $42,000 mark and Ether rebounded as investors tried to make sense of the crash that wiped away billions and shattered the notion of crypto as a maturing asset class.
“You can’t keep a good dip buyer down for long in the financial markets these days, and cryptos are no different,” said Jeffrey Halley, a senior market analyst at Oanda. “The mass liquidation yesterday will have thinned out the ranks of believers.”
Volatility has dominated crypto markets, with Bitcoin plunging and surging more than 30% within a few hours on Wednesday. The carnage kicked off last week, when Tesla Inc. billionaire Elon Musk criticized Bitcoin for wasting energy and backtracked on a decision to allow crypto transactions. Losses accelerated after China warned that digital tokens can’t be used for payments.
“It is still our best-performing allocation so far this year even after, you know, a 30% to 40% dislocation,”Troy Gayeski, co-chief investment officer at Skybridge Capital, said on Bloomberg TV. “The key is whatever size at cost you’re comfortable with, let the bull market play out, tolerate the volatility and have confidence that ultimately by the end of this year you will be at a meaningfully higher price.”
While all were proximate causes cited for the rout, the liquidation frenzy Wednesday morning was sentiment-driven and disorderly, with the coin dropping thousands of dollars in a matter of minutes. Selling gave way to more selling as investors lured into crypto in search of a quick buck bolted for the exits. It all accelerated when Bitcoin fell below its average price for the past 200 days.
On Thursday, the mood in the market was quieter, with traders looking for the next technical levels and speculating whether prices have become oversold. Bitcoin gained 11% to $42,013 as of 9:54 a.m. in New York. Ether added 15% to $2,919.
Halley at Oanda said Bitcoin’s round numbers will be important to watch. “$30,000.00 is the line in the sand now, and another capitulation wave will follow if it breaks,” he said, adding that if prices can hold above $40,000, then it’ll draw investors looking to get back into the action.
“This market presents opportunities for people now, but I think you will see people wait and let it settle,” said Todd Morakis, co-founder of digital-finance product and service provider JST Capital.
–With assistance from Lu Wang.