Cryptocurrencies nurse mega losses; Bitcoin back above $30,000

Sentiment surrounding cryptocurrency is fragile at the moment, as coins supposed to be pegged to the dollar have faltered.

Published On 13 May 202213 May 2022

Cryptocurrencies nursed large losses on Friday, with Bitcoin back above $30,000 and but still set for a record losing streak after the collapse of TerraUSD, a so-called stablecoin, rippled through cryptocurrency markets.

Crypto assets have also been swept up in broad selling of risky investments on worries about high inflation and rising interest rates. Sentiment is particularly fragile as tokens supposed to be pegged to the dollar have faltered.

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Bitcoin, the largest cryptocurrency by total market value, managed to bounce in the Asia session and traded about $30,500 at 11:40 GMT. It has staged something of a recovery from a 16-month low of about $25,400 reached on Thursday.

But it remains far below week-ago levels of about $40,000 and, unless there is a rebound in weekend trade, is headed for a record seventh consecutive weekly loss.

“I don’t think the worst is over,” said Scottie Siu, investment director of Axion Global Asset Management, a Hong-Kong-based firm that runs a crypto index fund.

“I think there is more downside in the coming days. I think what we need to see is the open interest collapse a lot more, so the speculators are really out of it, and that’s when I think the market will stabilize.”

Beyond Bitcoin

Crypto-related stocks have taken a pounding, with shares in broker Coinbase COIN.O steadying overnight but still down by half in little more than a week.

In Asia, Hong Kong-listed Huobi Technology 1611.HK and BC Technology Group 0863.HK, which operate trading platforms and other crypto services, eyed weekly drops of more than 20 percent.

But broader financial markets have so far seen little knock-on effect from the cryptocurrency crash.

“Crypto is still tiny and crypto integration within broader financial markets is still infinitesimally small,” said James Malcolm, head of FX strategy at UBS.

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