By Luis Monzon
Bitcoin, the world’s largest and most important cryptocurrency, is currently sitting around $30,000 after losing around 60% of its value in a period of just 6 months in a drop that has led a new round of crypto critics pointing out the unpredictability of virtual currencies .
While Bitcoin has now climbed for a third day (climbing by 3.7%), according to Bloomberg, it hasn’t managed to creep away from the $30,000 level for several weeks now.
The current situation for Bitcoin, and indeed for crypto in general, is negative. Antoni Trenchev, co-founder and managing partner of crypto lender Nexo believes that it is only a matter of time before Bitcoin returns to its 12 May lows of sub-$26,000 levels “given Bitcoin’s failure to mirror the Nasdaq’s gains in the past week.”
“This is the type of de-correlation nobody wanted,” said Trenchev. Previously, Bitcoin enjoyed a record-high correlation with the Nasdaq 100, but now as tech stocks have begun to rally in the past weeks, the crypto’s behaviour in contrast has been disappointing.
Bitcoin’s rise has been waylaid in recent months by the US’ Federal Reserve and other central banks turning towards rate-hiking cycles as Americans feel the pressure of stubbornly high inflation.
The recent collapse of the Terra cryptocurrency ecosystem also added further kindling to the burning fire that is the current sentiment towards digital assets and crypto.
Cryptocurrency trading has faced a bloodbath in recent months. According to the Bloomberg Billionaires Index, Coinbase CEO Brian Armstrong’s net worth has decreased from $13.7 billion to $2.2 billion.
This was not only due to the fall in digital asset prices, but also due to the fall in Coinbase shares, the price of which fell by more than 80%, as sentiment tanked.
The capital of Sam Bankman-Fried, CEO of the FTX crypto exchange, has halved and now stands at $11.3 billion, and well-known founders of the Gemini cryptocurrency trading platform, brothers Cameron and Tyler Winklevoss, have individually lost more than $2 billion, equivalent to almost 40% of their total fortune.
The Crypto Fear & Greed Index, which gauges the sentiment towards cryptocurrency as a trading asset, is firmly entrenched in the Extreme Fear zone. And the president of Euro Pacific Capital Peter Schiff predicts the fall of Bitcoin to levels around $8,000 with him saying, “We have a long way down.”
Even then, Bloomberg reports, Bitcoin is holding up relatively well compared with some of its contemporary coins, including second-place crypto Ether. Some technical analysis, however, is still flagging concerns over a further Bitcoin slump.
“One final pullback to test 12 may lows near $25,401 still looks more likely before any meaningful low is in place,” wrote Mark Newton, head of technical strategy at Fundrat.
Luis Monzon is a writer and journalist, currently writing for IT News Africa in the Tech Space.