Bitcoin Whipsaws Traders After Failing To Hold $30,000 Again
(Bloomberg) — Bitcoin retreated after climbing back above $30,000 for the first time in a week, reminding investors of the volatility that has long been a key attraction for many traders.
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The largest cryptocurrency by market swung between a gain of as much as 7.3% and a loss of about 1% during New York hours before settling at around $28,100. Around $1 billion in open interest on Bitcoin derivatives was liquidated during the price swings, data from Coinalyze shows.
Fueling the outbreak of volatility was a litany of speculation, including that a well-known trading firm dumped Bitcoin, the US government sold the cryptocurrency and even that tokens linked to Mt. Gox collapse may finally be reintroduced into the market.
“As interest rates rose yesterday due to the growing likelihood of the FRC’s demise, Bitcoin obviously rallied strongly,” Spencer Hallarn, derivatives trader at crypto investment firm GSR, said in a direct message. “When BTC couldn’t convincingly break 30k, and interest sold back today, it left us vulnerable to a sell off IMHO.”
US banking regulators weighed the prospect of downgrading their private ratings of First Republic Bank – a move that could limit the troubled firm’s access to the Federal Reserve’s lending facilities. The failure of several crypto-friendly banks earlier this year helped bolster the argument that crypto was insulated from the banking sector’s woes.
Google’s trending data shows that over the past seven days in the United States, the search terms “First Republic Bank” and “FRC” (the bank’s stock price) are the ones most associated with Bitcoin, said Stephane Ouellette, CEO of FRNT Financial. Inc, a crypto brokerage firm.
Bitcoin had struggled to maintain its upward momentum after hitting $30,000 earlier this month for the first time since June 2022, falling below $27,000 on Monday.
“I don’t see any major fundamental changes in the crypto market,” said Ilan Solot, co-head of digital assets at Marex. “The drawdown last week was largely driven by leveraged liquidations. The underlying trend still looks positive to me. Markets have already accepted that there will be continued negative regulatory news from the US and don’t seem to care anymore.”
Crypto-related stocks also briefly benefited from the short-lived rise in Bitcoin. Marathon Digital jumped 5%, MicroStrategy gained 2.9%, and while Coinbase finished lower on the day after going higher earlier.
“Crypto is really an expression of sentiment, it’s something that deviates from sentiment,” said Que Nguyen, CIO of equities at Research Affiliates, on an upcoming episode of the What Goes Up podcast. “There’s no intrinsic value necessarily attached to crypto. Where crypto gets value is in the community that’s enthusiastic about it. And so if the community is really excited about it, that’s great. If the community loses interest in it, it just goes away. »
–With assistance from Vildana Hajric and Carly Wanna.
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