The sell-off in the cryptocurrency market has stalled, with the President’s Day holiday bringing some respite. The reversal comes amid calls of a crypto winter, an extended lean patch just like the 2018 crypto bear market.
Bitcoin Limps Back Up: Bitcoin (CRYPTO: BTC), which on Monday morning pulled back to its lowest price since early February, is now reversing course. The apex crypto fell below the psychological support level of $40,000 on Sunday and closed the session at $38,431.38. It saw further weakness early in Monday’s session before cutting the losses and moving into positive territory.
The stock and bond markets in the U.S. are closed in observance of the Presidents’ Day holiday on Monday. Equity and commodity futures market will be open for abbreviated sessions. Since cryptocurrencies do not fall under any regulatory purview, the market trades 24-7, including on holidays.
Crypto trading during the weekends and holidays faces the threat of unusual volatility, characterized by wild price swings. Low volume and margin trading are some of the factors behind the huge moves. Crypto investors usually trade on margin, or in other words, money lent by the exchanges.
When the prices of the crypto holdings fall below a particular level, margin calls are triggered. With banks closed on holidays, investors may find it difficult to meet margin calls, forcing the exchanges to sell some crypto holdings.
After the weakness in the past few sessions, Ethereum (CRYPTO: ETH) is seeing a nice recovery.
Among other major altcoins, Binance Coin (CRYPTO: BNB) Cardano (CRYPTO: ADA) and Solana (CRYPTO: SOL) have all turned around.
In the meme coin space, Dogecoin (CRYPTO: DOGE) was up over 1% and Shiba Inu (CRYPTO: SHIB) was seen outperforming, with a gain of over 6%.
Stable coins, which are backed by the U.S. dollar, are holding steady to trading higher. Tether (CRYPTO: USDT) and USD Coin (CRYPTO: USDC) are seen flatlining or trading marginally higher. Terra (CRYPTO: LUNA) is gaining close to 8%.
Related Link: This Big US Investment Bank Is Doubling Down On Its Bitcoin Exposure
Expert View On The Sell-Off: The crypto market swoon seen since early November has left many wondering when things will start to look up. The prospect of Fed tightening and the Russia-Ukrainian standoff have been weighing down on the space in the near term.
Ethereum founder Vitalik Buterin sees another crypto winter as a welcome development, as it will lead to an industry shakeup. The crypto billionaire said in an interview with Bloomberg that the sell-off will ward off those projects indulging in market manipulation, and provide incentive for crypto projects focused on improving technology.
Recovery May Be Years Away: At least for Bitcoin, a reversal is not expected until late 2024 or the beginning of 2025, that’s according to Du Jun, co-founder of cryptocurrency exchange Huobi. Jun told CNBC that the Bitcoin bull markets correlate with the halving, which occurs once in every four years. The previous halving occurred in May 2020.
Bitcoin halving is the process of halving the rewards due to miners after each set of 210,000 blocks is mined. This is meant to check any exponential increase of bitcoin in circulation, thereby keeping prices in check.
At last check, Bitcoin was seen trading up 0.87% at $38,564.01.
Ethereum was adding 3.30% to $2,711.75.
Doge was rising 1.17% to $0.138100.
Shiba Inu was rallying 6.07% to $0.000027.
Related Link: Bitcoin Reigns Supreme, Still Accounts For 46% of the Total Value of Crypto Markets: Survey
Photo: Courtesy of Jorge Franganillo on Flickr
