Crypto World: Crypto World crosses its fingers in the hope that the infection has passed

The cryptocurrency market has been nothing short of a financial soap opera in 2022, and the drama continued this week when lender Celsius Network filed for bankruptcy. Still, there is one important place where the drama has cooled noticeably: the very prices of the biggest digital tokens.

Bitcoin climbed almost 8% during the last three days of the work week, while Ether rose 20%. Neither of the two dominant tokens has set a new low in this bear market in almost a month. Bitcoin has squeezed the closely monitored round figure of $ 20,000, while Ether hovers close to $ 1,000.

The relative stabilization in the lists fuels hopes that the infection may have taken its course after the spectacular collapse of tokens on the Terra blockchain, a wipe-out that also sent the hedge fund Three Arrows Capital and the brokerage house Voyager Digital into bankruptcy. While much of the crypto-world’s influence is not recorded on blockchains, and therefore hidden from scrutiny, what is visibly encouraging, according to James Check, chief analyst at Glassnode.

“I think the vast majority of forced sales have already happened,” Check said in an interview. “In general, the market seems relatively stable.”

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There are two important sources of potential sellers left, check reservations. One is Bitcoin miners, who have seen the value of their hardware plummet along with the price of the token – stress that could be exacerbated if Celsius’ mining company begins unloading some of its 80,850 rigs to raise capital. The other is traders who will arbitrarily sell risk assets of all kinds if the stock market starts to collapse again.

On that front, this week brought some potential good news for the laser eye set. First, the S&P 500 is still about 5% above the lowest bear market from last month. And the 40-day correlation between Bitcoin and the Nasdaq 100 index has fallen to its weakest level since January, suggesting that the two are less vulnerable to movement in both directions.

Read more: Bitcoin tips at the bottom, but it may be different this time

New catalysts are needed to push prices decisively in one way or another, according to James Malcolm, head of currency and cryptocurrency research at UBS. A good sign that the market can normalize, however, is the strong performance of second-tier tokens such as Matic and Aave.

“What we see in crypto at the moment is a situation where individual stories mean a little more,” he said. “Some of it is related to new products, some of it is related to technical upgrades and some to business relationships. So it seems we are slipping into a more conventional market.”

All that being said, this well-known mercurial asset class has proven time and time again that choosing a bottom – or a top – is a dangerous endeavor. And any green shoots that appear to be popping up in this cryptocurrency winter are likely to need nourishment from macroeconomic factors, which are currently driven by soaring inflation and the Federal Reserve’s determination to stop it with higher interest rates.

“I do not want to extrapolate too much on that,” said Marc Chandler, marketing strategist at Bannockburn Global Forex, about the recent stabilization in cryptocurrencies. “To me, the calmer tone you’ve seen in crypto this week may be a reflection of a lack of participation when people are trying to figure out what to do in this environment, where the Fed is clearly tightening.”