Crypto stabilizes as Bitcoin climbs back above $20,000
Crypto assets stabilized on Thursday and regained ground after Wednesday’s volatile trading saw Bitcoin tumble below $20,000 and altcoins drop.
Bitcoin (BTC) climbed back to $20,900 by Thursday afternoon, recovering from its 24-hour low of $19,764, while Ether (ETH), the second-largest cryptocurrency by market capitalization, was up about 5.5% at above $1,100.
Stocks gained Thursday, with the S&P 500 up 1%. The tech-heavy Nasdaq rose 1.5%, a sign of improved sentiment toward riskier assets.
Some altcoins benefitted from the positive sentiment and surged during the day on positive news.
MATIC, the native token of Ethereum-scaling platform Polygon, jumped 19% in the last 24 hours after Polygon introduced improved privacy for decentralized autonomous organizations (DAOs) on its network. The Cosmos network’s token, ATOM, gained 12% after decentralized exchange dXdY announced it would build its own blockchain with Cosmos, ditching Ethereum.
Further downside could squeeze exchanges
The $20,000 price point for BTC remains pivotal for the crypto market as analysts debate whether the largest cryptocurrency will see further declines akin to 2013, when BTC fell by 85%, and to 2017, when it plunged 84%. If Bitcoin experiences a similar fall this time around, the prices would fall close to $10,000.
Low prices for a sustained period of time might spell trouble for crypto exchanges, crypto data firm Kaiko warned in a research note Thursday.
“As prices remain low, volumes decrease, hedge funds unwind and fees compress, exchanges will be put to the test,” Kaiko analyst Riyad Carey wrote in the note.
“Those that have enough volume and spent responsibly through the bull market will likely be able to weather the storm, while those that played fast and loose with risky staking products and investments may go under if they aren’t acquired or bailed out by FTX or Alameda,” Carey added, referring to two companies led by billionaire entrepreneur Sam Bankman-Fried.
For example, futures crypto exchange CoinFLEX announced that it’s pausing withdrawals because of “extreme market conditions” and uncertainty around a certain counterparty.
Earlier this week, crypto exchange FTX supplied crypto lender BlockFi with $250 million in credit. Last week, Bankman-Fried’s trading outfit Alameda Research bailed out crypto broker Voyager Digital.
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