Bitcoin is up 1.6 percent in Asia in an uncertain sign of recovery from last week’s defeat.
Cryptocurrencies showed preliminary signs of recovery from last week’s crackdown, as bitcoin held more than $ 20,000.
Bitcoin rose 1.6 percent on Tuesday in Asia and traded at $ 20,665 at 8:42 a.m. in Tokyo. The MVIS Cryptocompare Digital Assets 100 index rose 1.5%. So-called altcoins like Solana and Polkadot were among the winners.
After a turbulent week in which bitcoin fell below $ 20,000 for the first time since 2020, some market observers point to possible signs that prices have bottomed out – at least for now. Bitcoin holding losses reached a record $ 7.3 billion last week, Glassnode said in a report Monday.
“As forced sellers appear to be managing much of recent sales, the market may begin to see signs of seller depletion in the coming weeks and months,” the report said.
Marcus Sotiriou, an analyst at GlobalBlock, cited data from Glassnode to say that “a macro bottom or a temporary bottom may be close”, according to a note from Monday. Altcoins have not suffered the same “cascade in liquidation” as bitcoin and ether, which are tokens used primarily as collateral for leverage positions, he said.
Any recovery in the market may be fleeting, as central banks around the world seek to drain liquidity to fight rampant inflation.
The T3 Bitcoin Volatility Index, a measure of the token’s 30-day volatility, jumped back to mid-May peaks when the TerraUSD stablecoin collapse shook markets.
“A toxic mix of bad news cycles and higher interest rates hurt the crypto market, and we can expect more volatility in the coming weeks,” said Feroz Medora, director of APAR’s Cameron trade and Tyler Winklevoss’ Gemini crypto platform. note for monday.
Bitcoin has now undergone two “distinctive phases of capitulation” since reaching a peak of nearly $ 69,000 in November, Glassnode said. The first was triggered by the collapse of TerraUSD’s stablecoin in early May, and last week’s was triggered by “massive debt reductions across the industry, both inside and outside the chain”.
Current bitcoin and ether trading models show that some large cryptocurrency holders are “pursuing liquidations to profit from the ousting of other players,” said Ciente Hsu, CEO of the decentralized financial platform ALEX.
Adding to the uncertainty is the intense pressure on DeFi applications. Their popularity as a source of high income grew when pandemic-era stimuli sparked a record crypto boom.
They are now forced to take unprecedented measures to protect themselves from a chain reaction of liquidations. Anti-crypto lending platform Celsius Network Ltd. said Monday that it needs more time to stabilize its liquidity and operations after the freeze on deposits earlier in June.