Bitcoin seems to be taking a welcome break for millions of investors.
The most popular cryptocurrency, has regained some life: the price was at $19,735.89, up 4.4% in the past hour as of this writing, according to data firm CoinGecko.
Bitcoin had fallen on June 18 to $17,677.43 before recovering somewhat to $18,290.75. The digital currency then extended its rebound after billionaire and crypto evangelist Elon Musk tweeted that he was currently buying meme coin Dogecoin.
“I will keep supporting Dogecoin,” Musk wrote on June 19.
“I am,” buying.
Musk’s tweet caused a real rebound in the market, which saw the post of the richest man in the world as a sign of renewed confidence in cryptocurrencies while there are many questions about the future of many projects and firms.
Ether, the second cryptocurrency by market value, was up 6.5% at $1,058.60 in the past hour. The native token of the Ethereum platform had fallen as low as $881 the previous day, its lowest since January 2021.
Ether and Bitcoin together represent just over 55% of the value of the crypto market, which often changes according to their price. The crypto market as a whole gained 3.7% to $972 billion in the past hour.
Over the past seven days, Bitcoin has lost 30.1% of its value and Ether 30.8%. But compared to its all-time high of $69,044.77 hit on Nov. 10, Bitcoin is down 72.1%, while Ether is down 79.2% compared to its all-time high — $4.878,26 — set the same day.
The reasons for the crash are the same: fears of recession are pushing investors to liquidate risky assets. Cryptocurrencies and tech groups are considered as such.
“A lot of people in the #crypto industry are saying that this crash is a healthy shake-out,” economist and crypto critic Peter Schiff wrote on Twitter. “I agree that it’s healthy, but not for crypto. That industry as we know it is dead, which is very healthy for the economy. Crypto likely has a future, but #Bitcoin will not be a part of it.”
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‘Terrible’ News Cycle for Crypto
The crypto market is also shaken by various scandals.
The first is the sudden collapse of sister tokens UST and Luna, despite their founders promising that their technology was solid and viable.
The second scandal is the decision, on June 12, by crypto lender Celsius Network to freeze withdrawals and other transactions from its platform. Rumors have since been circulating about a potential insolvency from Celsius, which has still not dispelled them.
Then, on June 17, crypto financial services company Babel Finance said it was temporarily suspending withdrawals and redemptions in the latest blow to the cryptocurrency sector.
“Due to the current situation, Babel Finance is facing unusual liquidity pressures,” the firm said in a statement. “We are in close communication with all related parties on the actions we are taking in order to best protect our customers.”
During this period, the statement continued, “redemptions and withdrawals from Babel Finance products will be temporarily suspended, and resumption of normal service be notified separately.”
Babel Finance describes itself as “one of the largest service providers to institutions in the crypto financial markets.”
Three Arrows Capital (3AC) confirmed the rumors according to which it was having very serious financial difficulties after its investments in projects like Luna turned into disaster.
“We are committed to working things out and finding an equitable solution for all our constituents,” the crypto hedge fund co-founder Kyle Davies told the Wall Street Journal.
“The news flow has been terrible for crypto,” said Edward Moya, senior market analyst for the Americas with Oanda.”The Texas Securities Board is investigating the Celsius network‘s decision to suspend withdrawals and everyone is expecting restrictive guidelines to quickly make life difficult for crypto-lending firms.”
Moya said that Bitcoin declined “as risk appetite left Wall Street as investors became worried of a much quicker deterioration for the US economy.”
“Surging recession fears are crippling appetite for risky assets and that has crypto traders remaining cautious about buying bitcoin at these lows,” he said.