Bitcoin holds steady near $21,000 even as stocks fall
Bitcoin held close to its recent perch of $21,000, and a leading crypto analyst said the market had already priced in the looming bankruptcy filing of crypto brokerage Genesis Global Capital and other recent industry debacles stemming from the collapse of disgraced crypto exchange FTX.
The largest cryptocurrency by market capitalization recently traded at around $20,980, up 0.8% in the past 24 hours, even as investors pondered conflicting economic reports.
“Most of the negative news should be priced in” because Genesis has been in trouble since late last year, Edward Moya, senior market analyst at Oanda, wrote in a Thursday note.
On Wednesday, Bloomberg reported that Genesis, a CoinDesk sister company, was in confidential negotiations with various creditor groups, and Genesis warned that it could seek bankruptcy protection if it is unable to raise capital. Bitcoin’s price fell as low as $20,370, down about 5% from the previous day, after the US Department of Justice announced an announcement that it charged Hong Kong-based crypto exchange Bitzlato with laundering $700 million.
But the announcement turned out to be “anti-climactic, at least against what the markets were betting would happen,” said Michael Safai, managing partner of crypto trading firm Dexterity Capital. Safai told CoinDesk that the crypto market’s recent positive sentiment could lift further if institutional traders maintain BTC’s trading range between $20,000 and $21,000 over the next couple of days.
Meanwhile, traditional markets continued to stumble this week, with the S&P down 0.7% for the day. The S&P, which has a hefty technology component, is down 2.1% in the past five days, as investors remain worried about the prospect of a recession and big banks started the earnings season with mixed results.
Crypto-exposed stocks were also mixed: Exchange Coinbase ( COIN ) was down 1.5% for the day, while bitcoin miner Marathon Digital Holdings ( MARA ) was up 6.2%.
The fall over the past two days has barely dented bitcoin’s sterling performance so far this year. BTC is up 26% since January 1st, rising from a weeks-long hiatus around $17,000.
Martin Leinweber, product specialist for digital assets at MarketVector Indexes, attributed bitcoin’s recent rally to a weaker US dollar, lower inflation and a short squeeze.
According to Coinglass data, traders liquidated around $492 million in short positions on January 13, sending BTC over $20,000.
However, Leinweber said it’s still hard to call a market bottom because “normally in a bear market, violent rallies tend to trick investors into thinking this is sustainable,” given that liquidity isn’t fully back yet.
“You very rarely see these V-shaped bottoms,” he told CoinDesk. “You see a rounding U-shape, which just takes a little bit of time and it’s a little volatile in between. That’s the best-case scenario. But I think you still need the right macro backdrop for risk assets to generally rise and crypto to outperform.” ยป
