The crypto market went steady on Friday, as Bitcoin recovers from a 16-month drop following a turbulent week marked by the implosion of the price of the stablecoin, TerraUSD (UST).
Crypto Market Forecast: Bitcoin Rallies Following the Collapse of Stablecoin
Cryptocurrencies have taken a hit as the value of Terra, a digital currency that was intended to be tethered to the US dollar, plummeted. The impact has reverberated across markets, with Bitcoin, the most valuable cryptocurrency in terms of total valuation, reaching a 16-month lowest level at one occasion. Concerns over rampant inflation and increasing interest rates have prompted widespread dumping of hazardous investments, including virtual currencies.
Bitcoin, the biggest crypto by total market capitalisation, managed to rebound in the Asia period and was trading about $30,500 at 1140 GMT. However, it is well below week-ago prices of nearly $40,000 and, unless weekend trade improves, is on track for a record sixth straight weekly loss.
Blockchain-related equities have taken a beating, with stocks in stockbroker Coinbase leveling out yesterday but still down significantly in less than a week. Throughout Asia, trading platforms and other crypto services operated by Hong Kong-listed Huobi Technology and BC Technology Group had weekly declines of more than 20%.
However, the Bitcoin fall has had minimal impact on mainstream financial markets thus far. Bitcoin recovered to exceed $30,500 in Friday trade. This constituted a partial rebound from Thursday’s 16-month low of roughly $25,400. However, it is considerably under week-ago levels of about $40,000 (£32,682) and, until weekend trade improves, is on track for a record sixth straight weeklong loss.
Since November, selling has approximately half the worldwide market value of cryptocurrencies, and this has escalated to hysteria in potential trade due to the strain on stablecoins.
If investors lose faith in stablecoins, it may have serious consequences for crypto and electronic banking. However, the lack of connectivity among cryptocurrency industry and regulated currency sector limits opportunities for cryptocurrency price volatility to trigger wider economic uncertainty.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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