Bitcoin dropped below $30,000 on Tuesday for the first time since July 2021 underscoring a decline from a November high to about 55% as risk averseness of investors increases.
The coin fell as much as s 3.9% to $29,764 in Asia before paring the slide. Meanwhile, Ether – the second biggest token, recovered sufficiently to eke out a small gain. Other coins like Solana and Avalanche remained in the red.
“We’re seeing a slow-motion meltdown, partially because it’s mostly been long holders selling” instead of levered liquidations, said Josh Lim, head of derivatives at New York-based brokerage Genesis Global Trading as reported by Bloomberg.
“Now that some corporate treasuries are hovering near their cost basis, markets are waiting and watching to see if shareholders will force some de-risking.”
Michael Novogratz, the billionaire cryptocurrency investor who leads Galaxy Digital Holdings Ltd., warned that he expects things to get worse before they get better.
“Crypto probably trades correlated to the Nasdaq until we hit a new equilibrium,” Novogratz said on Galaxy’s first-quarter earnings call on Monday. “My instinct is there’s some more damage to be done, and that will trade in a very choppy, volatile and difficult market for at least the next few quarters before people are getting some sense that we’re at an equilibrium.”
Stable coins such as TerraUSD became a matter of concern as well as the one-to-one peg fell below 70 cents U.S. on Tuesday, acceding to CoinGecko data.
“We’re watching carefully to see how the market fares over the next 24 hours,” Steven Goulden, senior research analyst at crypto market maker Cumberland DRW, said in an email as reported by Bloomberg.
“Including whether mechanisms being introduced to help increase reliance, such as LFG lending out Bitcoin to OTC trading firms, will be enough to hold in times of deep stress or if we need additional stabilization mechanisms.”
