Bitcoin and other cryptocurrencies bounced back Tuesday, after a tumultuous holiday weekend marked the lowest prices in more than a year.
Bitcoin rose 4.6% to $21,435.25 after falling as low as $17,601.58 on Saturday afternoon, according to CoinDesk data—its lowest since November 2020. As of Tuesday, bitcoin was down 69% from its record high in November 2021. It closed Friday at $20,627.21.
Ether rose 4.7% to $1,168.42 after trading as low as $880.93 on Saturday, according to CoinDesk, its lowest since January 2021.
The market value of all digital assets stood at $939 billion on Tuesday, down from nearly $3 trillion in November last year, according to CoinMarketCap data.
As the Federal Reserve continues to raise interest rates to tame higher-than-expected inflation, investors have been dumping speculative assets such as cryptocurrencies. Large crypto-dealing companies such as Coinbase Global Inc. , BlockFi, and Crypto.com have announced hundreds of job cuts, partly in response.
“We are at the mercy of the macro environment and crypto is definitely not immune to it,” said Kevin Kang, chief investment officer of crypto hedge fund BKCoin Capital. “I think we are going to continue to see the downtrend market for the foreseeable future until the Fed” stops raising interest rates and ultimately begins easing them.
Many crypto companies are under pressure in what has been dubbed “crypto winter.” One of the largest crypto lending platforms, Celsius Network LLC, hasn’t let users withdraw funds for more than a week due to “extreme market conditions.”
Asia-based crypto lender Babel Finance told customers Friday that it was suspending redemptions and withdrawals from all products, citing unusual liquidity pressures. The company said on Monday it reached preliminary agreements with counterparties and major customers on the repayment period of some debts, but it hasn’t allowed redemptions to resume.
Cryptocurrency-focused hedge fund Three Arrows Capital Ltd. hired legal and financial advisers after suffering heavy losses from a broad market selloff in digital assets, the firm’s founders told The Wall Street Journal.
BlockFi, another large crypto lender, said on Tuesday that it has secured a $250 million revolving credit facility from crypto exchange FTX to boost its balance sheet.
While prices have recovered from their weekend doldrums, the troubles of large companies in the industry haven’t gone away, said Armando Aguilar, a venture capitalist at LightShift Capital. “More downward pain could still be on the horizon,” he added.
Write to Vicky Ge Huang at [email protected]
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