Bitcoin hits 16-month low amid trouble at Terra
A bad week in the crypto markets continues, with the price of Bitcoin sinking to lows not seen for 16 months.
The largest cryptocurrency by market cap is currently changing hands for around $27k, a 15 per cent drop over the past 24 hours and 32 per cent over the past week.
The Ethereum price has slumped even further this morning, down approximately 23 per cent since this time yesterday morning to around $1,800. Other alt coins have performed even worse, with Solana, Cardano and Polkdot all falling more than 30 per cent.
The price action is again mirroring traditional stocks, which also ended sharply lower on Wednesday. The Nasdaq index of major tech stocks dropped more than three per cent, as soaring US inflation data announced yesterday meant further interest rate rises may be likely.
Bitcoin has been mirroring the Nasdaq performance throughout 2022. The growing correlations could be caused by the institutionalisation of Bitcoin as professional Wall Street investors move in, though they are seemingly being treated as a risk asset alongside growth stocks. Can Bitcoin shake this image?
Analysts are also pointing to the collapse of terraUSD (UST) stablecoin, which has been forced to sell its substantial Bitcoin reserves in an effort to maintain its ‘peg’. Most stablecoins peg their value to other assets such as the US dollar, with the aim of sticking as closely as possible to that asset’s value for better price stability. UST is different in that it is a so-called algorithmic stablecoin, which primarily uses market mechanics to manage the asset peg by linking UST with its sister coin, LUNA.
In late March and early April, LFG built up its BTC reserves through aggressive daily purchases, which some credit for the price rises we saw during that time.
The price of the Terra (LUNA) cryptocurrency has fallen by more than 99 per cent over the past week amidst the sell off though. There have been a number of attempts by the board to fix the situation, but is the damage already done?
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Yesterday’s Crypto AM Daily in association with Luno
In the markets
The Bitcoin economy
*Definitions and insights can be found at https://bytetree.com/research
Total crypto market cap
The total capitalisation of the entire cryptocurrency market at time of writing is currently $1.176 trillion.
What Bitcoin did yesterday
We closed yesterday, May 11 2022, at a price of $28,936.36. The daily high yesterday was $32,013.40 and the daily low was $28,170.41.
Bitcoin market capitalisation
Bitcoin’s market capitalisation at time of writing is $523.82 billion. To put it into context, the market cap of gold is $11.755 trillion and Tesla is $760.43 billion.
The total spot trading volume reported by all exchanges over the last 24 hours was $85.598 billion. High volumes can indicate that a significant price movement has stronger support and is more likely to be sustained.
The price volatility of Bitcoin over the last 30 days is 41.57%.
Fear and Greed Index
Market sentiment today is 12, in Extreme Fear.
Bitcoin’s market dominance
Bitcoin’s market dominance today is 44.23. Its lowest ever recorded dominance was 37.09 on January 1 2018.
Relative Strength Index (RSI)
The daily RSI is currently 24.54. Values of 70 or above indicate that an asset is becoming overbought and may be primed for a trend reversal or experience a correction in price – an RSI reading of 30 or below indicates an oversold or undervalued condition.
Convince your Nan: Soundbite of the day
“I think that the institutional focus on Bitcoin has created positive momentum for the entire blockchain space […] storing value and holding value are irrefutably its strengths.”
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It’s definitely tempting to get swept up in the excitement, but please heed these words of caution: Do your own research, only invest what you can afford, and make good decisions. The indicators contained in this article will hopefully help in this. Remember though, the content of this article is for information purposes only and is not investment advice or any form of recommendation or invitation. City AM, Crypto AM and Luno always advise you to obtain your own independent financial advice before investing or trading in cryptocurrency.
All information is correct as of 08:00 BST