Bitcoin has recovered slightly but is still facing a record losing streak following the collapse of a so-called stablecoin.
Crypto assets have taken a hit after a digital token called Terra — said to be pegged to the US dollar — plummeted in value.
The impact has spread through markets with Bitcoin, the largest cryptocurrency by total market value, hit a 16-month low in one place.
Crypto assets have also been swept up by the widespread selling of risky assets on worries of high inflation and rising interest rates.
Bitcoin managed to pull back above $30,500 (£24,920) in Friday trading.
This represented a bounce of sorts from a 16-month low of around $25,400 (£20,753) set on Thursday.
But it remains well below the level of around $40,000 (£32,682) a week ago and is heading for a seventh straight weekly loss unless there is a rebound in weekend trading.
“I don’t think the worst is over,” said Scottie Siu, investment director at Axion Global Asset Management, a Hong Kong-based company that operates a crypto index fund.
“I think there will be more downsides in the coming days.
“I think what we need to see is that open interest collapses a lot more for speculators to really be out and then I think the market will stabilize.”
But the broader financial markets have seen little impact from the cryptocurrency’s crash so far.
James Malcolm, Head of FX Strategy at UBS, said: “Crypto is still tiny and the integration of crypto into the broader financial markets is still infinitesimal.
“This idea that what happens in crypto stays in crypto — that’s where we are in a lot of ways right now.”
The sell-off has roughly halved the global cryptocurrency market value since November, but that has turned to panic in recent trading with pressure on stablecoins.
Rating agency Fitch said in a note Thursday that there could be “significant negative impacts” on cryptocurrencies and digital finance if investors lose faith in stablecoins.
However, Fitch said weak links between crypto markets and regulated financial markets will limit the potential for crypto market volatility to cause broader financial instability.
Bitcoin recovers slightly but is still set for record losing streak after Terra ‘stablecoin’ collapse | business news
Source link Bitcoin recovers slightly but is still set for record losing streak after Terra ‘stablecoin’ collapse | business news