Bitcoin
Cryptocurrencies and other cryptocurrencies partially recovered on Friday after a correction that briefly wiped out nearly $200 billion in value in the digital asset market.
Some analysts believe prices could fall further – even as traders continue to be optimistic about the outlook for cryptocurrencies in the coming months.
As of late Friday afternoon, Bitcoin's price had fallen 1.3% over the past 24 hours to $68,600 and remained 5.1% below its 24-hour high of roughly $72,300. The peak-to-trough decline was more than 9%, taking the price below $65,700 at its lows.
It looks like a short-term correction from record levels. Bitcoin reached an all-time high near $74,000 earlier this week, after surpassing its November 2021 high of around $69,000 the week before, amid a rally that saw the digital asset's market value rise to $2.6 trillion. At its lows on Friday, the total value of the cryptocurrency market was $2.5 trillion, down about $200 billion from the previous day, according to CoinMarketCap.com.
“Bitcoin looks very bullish even if it sees a much-delayed correction in the coming days,” said Rachel Lin, CEO of trading platform SynFutures. “With Bitcoin clearly in price discovery mode, we may see a strong uptrend in the coming weeks and months.”
Advertisement – Scroll to continue
In fact, Bitcoin is still up by about two-thirds this year – still supported by several factors.
Among them are cheer in the stock market and a broader improvement in risk sentiment. the
Standard & Poor's 500
And
Nasdaq Composite
Cryptocurrencies remain close to record levels, sparking a rebound in cryptocurrencies, which have long proven to be correlated with stocks. Traders are also optimistic about the so-called Bitcoin halving, a programmed monetary policy cut for the currency that will see supply restricted next month, potentially boosting prices at a time of rising demand.
But Bitcoin's biggest boost came from spot exchange-traded funds, or ETFs, which were approved by the Securities and Exchange Commission in January and ushered in a new wave of investor interest in cryptocurrencies. These funds have received billions of dollars in inflows, and since they hold Bitcoin itself — not just the derivatives that track its price — their record popularity has had a significant impact on token prices.
Advertisement – Scroll to continue
“The surge in demand for Bitcoin as a result of newly launched ETFs is profound, as evidenced by the massive amount of capital flowing into them daily,” said Marcus Levin, co-founder of the XYO blockchain network. “Of course we could see significant declines, but… I see this trend continuing for the foreseeable future.”
However, digital asset prices may fall further due to the amount of froth that has accumulated in cryptocurrencies in recent weeks. Traders have overwhelmingly piled into bullish bets on Bitcoin futures made with borrowed money — a dynamic that makes prices vulnerable to volatile fluctuations if the market turns against the positions held by most traders.
“New historical highs are an incentive to sell. Some players are taking profits, which raises the question of whether there will be enough active buyers at current levels or whether the majority would prefer to wait,” said Alex Kuptsikevich, an analyst at brokerage FxPro. Deeper correction.
“In a corrective scenario, the $65,000 to $65,500 and $60,000 to $60,500 areas are especially important, because they contain significant round levels that are important for retail trading. [investors],” he added.
Beyond Bitcoin,
ether
— the second-largest cryptocurrency by market cap — fell 2.8% over the past 24 hours to $3,680 in choppy trading. Micro tokens or altcoins were also volatile.
Cardano
It was up 1% as of Friday afternoon, after falling 5%, while…
ribbed
Decreased by 5.3%. Memecoins also declined
Dogecoin
And
Advertisement – Scroll to continue
Shiba Inu
It decreased by 4% and 4.4%, respectively.
Write to Jack Denton at jack.denton@barrons.com
