First Mover Asia: Funds Lost Billions in the Terra Collapse. Here are the Ongoing Effects; Bitcoin Sees Red

Don't miss CoinDesk's Consensus 2022, the must-attend crypto & blockchain festival experience of the year in Austin, TX this June 9-12.

Good morning. Here’s what’s happening:

Prices: While stocks had a good day, bitcoin and other major cryptos continued to struggle.

Insights: The effects of the Terra collapse will continue to ripple through the investment eco-system.

Technician's take: A brief relief bounce is likely, similar to what occurred in late February and late March.

Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis. And sign up for First Mover, our daily newsletter putting the latest moves in crypto markets in context.

While stocks spiked in Monday trading, major cryptocurrencies continued their recent trudge through a red gloom.

By early afternoon, bitcoin had fallen almost 4% over the past 24 hours to the low end of the $29,000-$30,000 range it has occupied for the nearly two weeks since the UST stablecoin and LUNA token that supports it imploded. The largest cryptocurrency by market capitalization, has dropped 26% from its high this month near $40,000 and roughly 55% since reaching its record peak last November. Ether, the second largest crypto by market cap, was down approximately 3.5% over the same period and changing hands a little below $2,000.

Most major cryptos spent much of the day in the red with AVAX recently off over 8% and GALA, ALGO and MANA each down more than 6% amid ongoing investor fears about inflation and a possible recession as central banks tighten monetary policy. Trading was choppy underlining these concerns.

"We don't have earnings [this week}, we haven't had a stablecoin lose $48 billion, and we haven't had a Presidential Executive Order," 3iQ Digital Asset's Head of Research Mark Connors told CoinDesk, adding: "It's about inflation and that's uncertain. So we are rangebound."

Stocks traveled a different paths, as they've done for most the past few days, rising after senior executives at JPMorgan Chase said that U.S. consumer credit market was in good shape short-term. The S&P 500, which spent a large portion of Friday in bear market territory, meaning that the index was trading at least 20% lower than its previous high, increased 1.8%. The Dow Jones Industrial Average and tech heavy Nasdaq climbed 1.9% and 1.5%, respectively. Last week, the indices plunged almost 3%.

Cryptos have spent much of the year tracking stocks so the latest separation represents at least a small twist in their evolving relationship. 3iQ's Connors said that digital assets will likely remain rangebound at least until the U.S. Bureau of Labor Statistics issues its next consumer price index report (CPI) in early June. The CPI may show if inflationary pressure is waning.

"For right now, you might have some people pushing uncertain markets to see what breaks but I don't think there will be breaks either way," Connors said

Previous Post Next Post